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Exactly -- there's a pervasive belief in the bay area that high rents are solely due to the evil cabal of landlords who meet every week in a dimly lit room and

Exactly -- there's a pervasive belief in the bay area that high rents are solely due to the evil cabal of landlords who meet every week in a dimly lit room and agree to charge sky-high rents while cackling maniacally and twirling their perfectly-waxed moustaches. The sudden COVID-related rent price drop indicates that this theory is nonsense, and that the high rents are solely a function of supply and demand, but I'm sure that won't stop anyone from believing in it.

ashtonkem 6y ago
I’m not sure why, but a surprising number of people seem to have convinced themselves that supply and demand doesn’t apply to housing.
- SpicyLemonZest 6y ago
  I think most people doubt supply and demand to some degree. How often have you seen someone argue we should secure the supply of food to disaster zones by repealing price gouging laws? Rent control is popular because many people believe, wrongly but wholeheartedly, that landlords are just price gougers and everyone could get cheap adequate housing if they weren’t manipulating it.
  - ashtonkem 6y ago
    My opinion is that rent control is much less about actually controlling rent, and more about controlling who is allowed to be in the city and where. Most rent control systems I’ve seen strongly favor those who have been in their current apartment for a long time, as moving often resets the rents back to market rate. And while that does help avoid evicting long time (and old) tenants, it also has the effect of forcing everyone on rent control to stay where they are. I mentally couple the way that rent control works with the pretty common opinion that the city was great until “they” came, and would be excellent again if they’d just leave. While the “they” changes from place to place and time to time, the attitude seems to be pretty common. You even see this attitude here on HN, with occasional assertions that those who moved there for tech jobs should move and let rents fall for those who have always been there.
    - SpicyLemonZest 6y ago
      That concern, though, is something I've grown much more sympathetic to. There's a fundamental unfairness in putting in work to make your local community great, making it so good that rich people want to live there, and then being told that the community no longer has room for you because the rent is too high. If the city won't allow enough housing to keep your area affordable, you have a right to feel aggrieved, and it's understandable that you might misdirect the grievance if you have no lived experience of a city successfully expanding the housing supply.
      - renewiltord 6y ago
        People overestimate their impact on the community. The elephant here is that those people contributed very little to making the place desirable. You can usually tell. They'll say that the culture has changed because the desirable people left. That's right. But the groupies are still there. They just don't know where the desirable people went.
      - imtringued 6y ago
        >There's a fundamental unfairness in putting in work to make your local community great, making it so good that rich people want to live there, Actually that is a the result of an incredibly skewed tax policy. Prop 13 means that the government cannot derive any significant tax income from residential property. It is forced to allow commercial property because it brings in tax money. This means you will always have more commercial property than residential property. Land owners want this because it raises their property values. The government wants this because it's the only way to fund itself. When you look at the reality of what you are doing you are actually incredibly selfish. You are creating jobs and moving them away from rural places but at the same time you are not building enough housing so that people can live near those jobs. You do this because you want the value of your property to go up. Then once those people are coming because you moved all the jobs to your city you start complaining because they want to work there. There is this misconception that it's "rich people" who want to live there when the reality is that those people only became rich after they arrived in your city. It's you who created them. >, and then being told that the community no longer has room for you because the rent is too high. Well, that's exactly what you wanted. You wanted more jobs meaning more people but you did not want more housing which means someone has to go. If you call this unfair then you have no one to blame other yourself.
  - ishjoh 6y ago
    What's interesting and something I've witnessed first hand in NYC, that the tenants of rent controlled apartments will setup a black market for their rent controlled apartment in collusion with their landlord. So if they do move they will attempt to sell for the privilege of renting the unit, at the time this could range as high as $50k, the landlord and previous tenant would split this 'fee'. What's incredible is that for the right apartment in the right part of NYC amortized over a few years, this was a great deal for the new tenant.
    - lotsofpulp 6y ago
      Arbitrage is to always be expected when real market prices don’t match statutory (or nominal) prices.
    - deleted 6y ago
      [deleted]
  - imtringued 6y ago
    The supply and demand based solution to price gouging is to make the government guarantee access to the good at the desired price. Price gouging laws themselves don't solve the problem. If anything, the government can pretend that the problem has been solved and block any potential resolution. They can make the problem far worse. I'll say it over and over again. If you want to fix the economics then you must fix physical reality. Why does the government guarantee work? Because it will be the government's responsibility to fix the problem. If the government created laws that caused the problem then it will be forced to change those laws. The classic price gouging example is the mask shortage where people will constantly say that manufacturers can't expand their supply fast enough so price gouging is inevitable and the duct tape fix is the only way to solve the problem. If you introduce a government price guarantee the government will be forced to buy existing masks off the private market and sell them for a lower price. Effectively subsidizing the manufacturers of the mask. The manufacturer can charge an increasing amount of money for the masks until it becomes profitable to expand production capacity immediately. What if greedy manufacturers gouge the government? The obligation to provide masks doesn't disappear because of a little greed. In fact, the government can just buy the manufacturers and build its own factories and completely remove the need for uncompetitive mask manufacturers. If anything, there is now immense pressure for private industry to stay relevant by offering prices lower than what the government is guaranteeing.
    - ric2b 6y ago
      > The supply and demand based solution to price gouging is to make the government guarantee access to the good at the desired price. In a disaster situation that's not so easy to do.
  - grendix 6y ago
    Rent control is popular with renters because the rent is too damn high. You can figure that one out without assigning motives to people you've never met.
    - SpicyLemonZest 6y ago
      I don’t know why you’re assuming bad faith here. I’ve met rent control advocates, talked to them, and read their detailed explanations of why they think there should be rent control. They often believe exactly what I said, and always have some principled explanation for why it’s not fair that the rent is high; despite that one guy in New York, I’ve never actually met anyone who argues for rent control on the grounds of pure self-interest.
bluntfang 6y ago
even for hyperbole this is hogwash. No one thinks people become landlords because they want to treat their tenets like shit. Obviously they just want to make ends meet like everyone else, they just happen to do so in a way that hurts communities, not on purpose, mind you, but because that's how you get ahead in this society.
guiambros 6y ago
Technically it is supply and demand, but there are systemic factors at play that can't be ignored. This is not a typical supply and demand marketplace. The supply here is artificially constrained by existing regulations, and there's a vicious relationship between land owners, elected officials, and demand pressure from folks with high paying jobs. It's interesting to see how little things have progressed over the last few decades. For example, check this study [1] from fourty years ago. TL;DR: "A recent survey of local land use policies in the Bay Area identified the important role that land-use controls play in limiting developments. The suburban land squeeze is not the exclusive result of immutable natural constraints. It is the outcome of the restrictive land use and development regulations imposed by many of the region's 100 land governments. A new mood has emerged in the suburbs; land use controls now place severe limits on where, when and how the region can develop. Continued suburban land conversion is now viewed as undesirable, and efforts to limit residential development are well organized and effective." It's certainly not an "evil cabal of landlords in a dimly lit room", but it'd be naive to ignore the systemic forces at play. [1] https://escholarship.org/uc/item/0ds0q9q4 https://escholarship.org/uc/item/0ds0q9q4
mancerayder 6y ago
There are two problems with this line of reasoning of the type of muddied thinking you're replying to. The first is that it can both be true that supply and demand as a phenomenon can be used to meaningfully explain the world and applies to housing, AND that an individual can denounce landlords morally with the phrase "greedy". However, the OP cannot reconcile the two concepts, they said. Next, the idea that landlords are a unified group with a common set of designs is itself a premise that requires a little bit of legwork. Here's one. What are landlord expenses versus their expenditures. Are they large or small landlords. etc. To hell with nuance, let's create an Us v Them type of discourse, and see who bites.
AtlasBarfed 6y ago
artificially restricted supply Let's not pretend this is Milton's economic utopia.
maxsilver 6y ago
> The sudden COVID-related rent price drop indicates that this theory is nonsense, and that the high rents are solely a function of supply and demand, Except your own example demonstrates that it's not. If it was "solely supply and demand", then rents should drop far more dramatically than they have, down to levels comparable to other cities that used to be equally unpopular. Yet there's a literal pandemic and even though demand for San Francisco housing is at a ~20-year low, with newly-empty units everywhere, San Francisco still remains one of the priciest cities in the nation. Short of like, an earthquake wiping SF off the map or similar sized event, demand for SF housing will never get lower than this, and it's still not enough to bring rents remotely back into the real world. Supply and demand have an impact on housing prices, but are definitely not the "sole" source of them. Landlord behaviour, city tax goals, investment banking demands, private equity involvement, and much more all dramatically impact the price of rent far more than "supply v demand" or any "regulation" does. This is hard to understand for folks used to megacity pricing, where "high demand" (i.e., a small-but-consistent influx of new residents) is until recently, an automatic given thing you could just always point to as blame for any problem. For those of us out in the midwest, where demand is regularly falling in many places, where new construction always outpaces population growth every single year, and yet the housing prices still always rise, the disconnect between prices and supply/demand is quite a bit more obvious.
- chii 6y ago
  > where demand is regularly falling in many places, where new construction always outpaces population growth every single year, and yet the housing prices still always rise that just sounds wrong, and may be i can't see the whole picture from just your comments, but the price _can't_ be rising if demand is falling. Otherwise, these new construction will not sell at all. SO there _must_ be some sort of demand.

ashtonkem 6y ago

I’m not sure why, but a surprising number of people seem to have convinced themselves that supply and demand doesn’t apply to housing.

SpicyLemonZest 6y ago
I think most people doubt supply and demand to some degree. How often have you seen someone argue we should secure the supply of food to disaster zones by repealing price gouging laws? Rent control is popular because many people believe, wrongly but wholeheartedly, that landlords are just price gougers and everyone could get cheap adequate housing if they weren’t manipulating it.
- ashtonkem 6y ago
  My opinion is that rent control is much less about actually controlling rent, and more about controlling who is allowed to be in the city and where. Most rent control systems I’ve seen strongly favor those who have been in their current apartment for a long time, as moving often resets the rents back to market rate. And while that does help avoid evicting long time (and old) tenants, it also has the effect of forcing everyone on rent control to stay where they are. I mentally couple the way that rent control works with the pretty common opinion that the city was great until “they” came, and would be excellent again if they’d just leave. While the “they” changes from place to place and time to time, the attitude seems to be pretty common. You even see this attitude here on HN, with occasional assertions that those who moved there for tech jobs should move and let rents fall for those who have always been there.
  - SpicyLemonZest 6y ago
    That concern, though, is something I've grown much more sympathetic to. There's a fundamental unfairness in putting in work to make your local community great, making it so good that rich people want to live there, and then being told that the community no longer has room for you because the rent is too high. If the city won't allow enough housing to keep your area affordable, you have a right to feel aggrieved, and it's understandable that you might misdirect the grievance if you have no lived experience of a city successfully expanding the housing supply.
    - renewiltord 6y ago
      People overestimate their impact on the community. The elephant here is that those people contributed very little to making the place desirable. You can usually tell. They'll say that the culture has changed because the desirable people left. That's right. But the groupies are still there. They just don't know where the desirable people went.
    - imtringued 6y ago
      >There's a fundamental unfairness in putting in work to make your local community great, making it so good that rich people want to live there, Actually that is a the result of an incredibly skewed tax policy. Prop 13 means that the government cannot derive any significant tax income from residential property. It is forced to allow commercial property because it brings in tax money. This means you will always have more commercial property than residential property. Land owners want this because it raises their property values. The government wants this because it's the only way to fund itself. When you look at the reality of what you are doing you are actually incredibly selfish. You are creating jobs and moving them away from rural places but at the same time you are not building enough housing so that people can live near those jobs. You do this because you want the value of your property to go up. Then once those people are coming because you moved all the jobs to your city you start complaining because they want to work there. There is this misconception that it's "rich people" who want to live there when the reality is that those people only became rich after they arrived in your city. It's you who created them. >, and then being told that the community no longer has room for you because the rent is too high. Well, that's exactly what you wanted. You wanted more jobs meaning more people but you did not want more housing which means someone has to go. If you call this unfair then you have no one to blame other yourself.
- ishjoh 6y ago
  What's interesting and something I've witnessed first hand in NYC, that the tenants of rent controlled apartments will setup a black market for their rent controlled apartment in collusion with their landlord. So if they do move they will attempt to sell for the privilege of renting the unit, at the time this could range as high as $50k, the landlord and previous tenant would split this 'fee'. What's incredible is that for the right apartment in the right part of NYC amortized over a few years, this was a great deal for the new tenant.
  - lotsofpulp 6y ago
    Arbitrage is to always be expected when real market prices don’t match statutory (or nominal) prices.
  - deleted 6y ago
    [deleted]
- imtringued 6y ago
  The supply and demand based solution to price gouging is to make the government guarantee access to the good at the desired price. Price gouging laws themselves don't solve the problem. If anything, the government can pretend that the problem has been solved and block any potential resolution. They can make the problem far worse. I'll say it over and over again. If you want to fix the economics then you must fix physical reality. Why does the government guarantee work? Because it will be the government's responsibility to fix the problem. If the government created laws that caused the problem then it will be forced to change those laws. The classic price gouging example is the mask shortage where people will constantly say that manufacturers can't expand their supply fast enough so price gouging is inevitable and the duct tape fix is the only way to solve the problem. If you introduce a government price guarantee the government will be forced to buy existing masks off the private market and sell them for a lower price. Effectively subsidizing the manufacturers of the mask. The manufacturer can charge an increasing amount of money for the masks until it becomes profitable to expand production capacity immediately. What if greedy manufacturers gouge the government? The obligation to provide masks doesn't disappear because of a little greed. In fact, the government can just buy the manufacturers and build its own factories and completely remove the need for uncompetitive mask manufacturers. If anything, there is now immense pressure for private industry to stay relevant by offering prices lower than what the government is guaranteeing.
  - ric2b 6y ago
    > The supply and demand based solution to price gouging is to make the government guarantee access to the good at the desired price. In a disaster situation that's not so easy to do.
- grendix 6y ago
  Rent control is popular with renters because the rent is too damn high. You can figure that one out without assigning motives to people you've never met.
  - SpicyLemonZest 6y ago
    I don’t know why you’re assuming bad faith here. I’ve met rent control advocates, talked to them, and read their detailed explanations of why they think there should be rent control. They often believe exactly what I said, and always have some principled explanation for why it’s not fair that the rent is high; despite that one guy in New York, I’ve never actually met anyone who argues for rent control on the grounds of pure self-interest.

bluntfang 6y ago

even for hyperbole this is hogwash. No one thinks people become landlords because they want to treat their tenets like shit. Obviously they just want to make ends meet like everyone else, they just happen to do so in a way that hurts communities, not on purpose, mind you, but because that's how you get ahead in this society.

guiambros 6y ago

Technically it is supply and demand, but there are systemic factors at play that can't be ignored. This is not a typical supply and demand marketplace. The supply here is artificially constrained by existing regulations, and there's a vicious relationship between land owners, elected officials, and demand pressure from folks with high paying jobs. It's interesting to see how little things have progressed over the last few decades. For example, check this study [1] from fourty years ago. TL;DR: "A recent survey of local land use policies in the Bay Area identified the important role that land-use controls play in limiting developments. The suburban land squeeze is not the exclusive result of immutable natural constraints. It is the outcome of the restrictive land use and development regulations imposed by many of the region's 100 land governments. A new mood has emerged in the suburbs; land use controls now place severe limits on where, when and how the region can develop. Continued suburban land conversion is now viewed as undesirable, and efforts to limit residential development are well organized and effective." It's certainly not an "evil cabal of landlords in a dimly lit room", but it'd be naive to ignore the systemic forces at play. [1] https://escholarship.org/uc/item/0ds0q9q4 https://escholarship.org/uc/item/0ds0q9q4

mancerayder 6y ago

There are two problems with this line of reasoning of the type of muddied thinking you're replying to. The first is that it can both be true that supply and demand as a phenomenon can be used to meaningfully explain the world and applies to housing, AND that an individual can denounce landlords morally with the phrase "greedy". However, the OP cannot reconcile the two concepts, they said. Next, the idea that landlords are a unified group with a common set of designs is itself a premise that requires a little bit of legwork. Here's one. What are landlord expenses versus their expenditures. Are they large or small landlords. etc. To hell with nuance, let's create an Us v Them type of discourse, and see who bites.

AtlasBarfed 6y ago

artificially restricted supply Let's not pretend this is Milton's economic utopia.

maxsilver 6y ago

> The sudden COVID-related rent price drop indicates that this theory is nonsense, and that the high rents are solely a function of supply and demand, Except your own example demonstrates that it's not. If it was "solely supply and demand", then rents should drop far more dramatically than they have, down to levels comparable to other cities that used to be equally unpopular. Yet there's a literal pandemic and even though demand for San Francisco housing is at a ~20-year low, with newly-empty units everywhere, San Francisco still remains one of the priciest cities in the nation. Short of like, an earthquake wiping SF off the map or similar sized event, demand for SF housing will never get lower than this, and it's still not enough to bring rents remotely back into the real world. Supply and demand have an impact on housing prices, but are definitely not the "sole" source of them. Landlord behaviour, city tax goals, investment banking demands, private equity involvement, and much more all dramatically impact the price of rent far more than "supply v demand" or any "regulation" does. This is hard to understand for folks used to megacity pricing, where "high demand" (i.e., a small-but-consistent influx of new residents) is until recently, an automatic given thing you could just always point to as blame for any problem. For those of us out in the midwest, where demand is regularly falling in many places, where new construction always outpaces population growth every single year, and yet the housing prices still always rise, the disconnect between prices and supply/demand is quite a bit more obvious.

chii 6y ago
> where demand is regularly falling in many places, where new construction always outpaces population growth every single year, and yet the housing prices still always rise that just sounds wrong, and may be i can't see the whole picture from just your comments, but the price _can't_ be rising if demand is falling. Otherwise, these new construction will not sell at all. SO there _must_ be some sort of demand.