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> Bottom line is that this service is not responsible for higher rents, the market is. This service is directly and indirectly responsible for landlord's incre

> Bottom line is that this service is not responsible for higher rents, the market is. This service is directly and indirectly responsible for landlord's increasing rent for their tenants. Blaming "the market" is a convenient way to cast blame away from people responsible onto a nebulous concept. Companies like Zillow use software based on "the market" to determine housing prices. But for all intents and purposes they are responsible for driving up housing prices based on actions informed by their software, because their actions directly influence "the market".

defterGoose 4y ago
This is what so many "free market" hawks tend to misunderstand. The market is not an acyclic network, but is still strongly ordered in its power imbalance. 'The world is in greater peril from those who tolerate or encourage evil than from those who actually commit it.' -Albert Einstein
- anigbrowl 4y ago
  Most of them understand it just fine. They just don't care as long as it benefits them in the short term. Sure, you could talk about the long term unsustainability, but they quite reasonably figure that they'll be better positioned over the long term by virtue of having a lot more money.
- thunky 4y ago
  If the "free market" isn't good enough for you here, what are you suggesting is the solution? Banning software that analyzes market data if the output may result in pricing adjustments?
  - acdha 4y ago
    There isn’t a single “free market” and this one isn’t particularly free since there’s hefty information asymmetry and buyers typically have much lower negotiating power (you must have somewhere to live this month; a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option). Mainstream economic consensus for ages has been that markets need some regulation to work most effectively and that’s especially true for a basic human need like housing which controls how healthy the overall community is. Some obvious things to regulate here could be mandatory disclosure of sources used to justify increases, annual rate caps, requiring amounts over a certain threshold to be itemized and temporary (i.e. if the building includes heat & oil costs spiked require the owner to show that the price they actually paid went up & don’t raise the rent permanently since it’ll come back down).
    - baggy_trough 4y ago
      Mainstream economic consensus would be that your proposals are very bad ideas.
      - richbell 4y ago
        Why?
        baggy_trough 4y ago
        Because they add deadweight loss to the economy by interfering with price signals and raising transaction costs.
    - thunky 4y ago
      > a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. And remember it works both ways. It doesn't seem like it now, but sometimes, in some markets, it's hard for landlords to attract tenants. I have serious doubts that regulation or any other form of intervention on pricing would have anything but unintended consequences, in some cases leading to the exact problem you're trying to prevent: https://www.americanexperiment.org/new-york-landlords-are-keeping-apartments-off-the-market-due-to-rent-control/ https://www.americanexperiment.org/new-york-landlords-are-ke...
      - acdha 4y ago
        > I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. Oh, sure but the point is just that the market dynamics favor sellers pretty strongly. For example, how much does the hassle of moving or leaving a neighborhood deter the kind of negotiation which would normally be key to keeping a market stable? Note also that regulation doesn’t need to directly control pricing to make a difference. Since information asymmetry is a lot of the problem here, increased transparency could help improve the situation and give people better negotiating positions (e.g. if a building owner is profitable at 30% less than asking for all of the current leases, you can probably negotiate better with that information than if you don’t have it)
thunky 4y ago
> actions informed by their software Yes, informed. The output of this software, and Zillow's algorithms, is only information that still needs to be applied to the real world ("the market"). The algorithms just provide information that wasn't as easy to access before. It's like saying that Google is responsible for higher rents/prices because it allows landlords/homeowners to easily access and analyze market data. I don't think so.
- richbell 4y ago
  > Yes, informed. The output of this software, and Zillow's algorithms, is only information that still needs to be applied to the real world ("the market"). The algorithms just provide information that wasn't as easy to access before. Who verifies that the algorithm is correct? Who is culpable if the algorithm is flawed or applied incorrectly? If GreyStar or Zillow realized their algorithms were significantly inflating values, would there be any incentive to correct it without regulation? > It's like saying that Google is responsible for higher rents/prices because it allows landlords/homeowners to easily access and analyze market data. I don't think so. Except that information isn't readily available and easily accessible on Google (in many jurisdictios). It's locked away behind pricey subscriptions to vendor products. In the case of YieldStar it means that tenants cannot fairly negotiate because they don't know what a reasonable price is.
  - thunky 4y ago
    > Who verifies that the algorithm is correct? You're not going to like this answer, but...the market does. The point is that no software has to power to force tenants to pay higher than market rents. edit to add: > In the case of YieldStar it means that tenants cannot fairly negotiate because they don't know what a reasonable price is. If that's the case, then the landlords could save the money they're spending on YieldStar and just set the high prices already. They could use their own proprietary "I want more money" algorithm, and the tenant would have no choice but to pay whatever number the landlord popped out of their head.
    - richbell 4y ago
WalterBright 4y ago
So, why don't landlords just double the rent? Heck, why not triple it?
- richbell 4y ago
  > So, why don't landlords just double the rent? Heck, why not triple it? I'm not sure where you're from but the rent in my area HAS more than doubled in the past few years.
  - WalterBright 4y ago
    Since the market is inelastic, and landlords can charge whatever they want, make it 10x.
    - richbell 4y ago
      > Since the market is inelastic, and landlords can charge whatever they want, make it 10x. They'll get there, slowly and steadily. You obviously cannot snap your finger and raise the rent 10x in an instant. You have to boil the frog slowly, by continuously buying up properties and raise rents considerably every year, especially for new tenants. In my city the overwhelming majority of residential apartments are owned by a single private company. This is an especially profitable venture with trailer parks, which don't have as many pesky tenant rights or protections. E.g., https://www.newyorker.com/magazine/2021/03/15/what-happens-when-investment-firms-acquire-trailer-parks https://www.newyorker.com/magazine/2021/03/15/what-happens-w...
      - WalterBright 4y ago
        > You obviously cannot snap your finger and raise the rent 10x in an instant. Why not? Demand is inelastic, and people will be forced to pay it. Right?
        richbell 4y ago
        > Why not? Demand is inelastic, and people will be forced to pay it. Right? You're clearly not engaging in good faith so continuing this discussion would be pointless.

defterGoose 4y ago

This is what so many "free market" hawks tend to misunderstand. The market is not an acyclic network, but is still strongly ordered in its power imbalance. 'The world is in greater peril from those who tolerate or encourage evil than from those who actually commit it.' -Albert Einstein

anigbrowl 4y ago
Most of them understand it just fine. They just don't care as long as it benefits them in the short term. Sure, you could talk about the long term unsustainability, but they quite reasonably figure that they'll be better positioned over the long term by virtue of having a lot more money.
thunky 4y ago
If the "free market" isn't good enough for you here, what are you suggesting is the solution? Banning software that analyzes market data if the output may result in pricing adjustments?
- acdha 4y ago
  There isn’t a single “free market” and this one isn’t particularly free since there’s hefty information asymmetry and buyers typically have much lower negotiating power (you must have somewhere to live this month; a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option). Mainstream economic consensus for ages has been that markets need some regulation to work most effectively and that’s especially true for a basic human need like housing which controls how healthy the overall community is. Some obvious things to regulate here could be mandatory disclosure of sources used to justify increases, annual rate caps, requiring amounts over a certain threshold to be itemized and temporary (i.e. if the building includes heat & oil costs spiked require the owner to show that the price they actually paid went up & don’t raise the rent permanently since it’ll come back down).
  - baggy_trough 4y ago
    Mainstream economic consensus would be that your proposals are very bad ideas.
    - richbell 4y ago
      Why?
      - baggy_trough 4y ago
        Because they add deadweight loss to the economy by interfering with price signals and raising transaction costs.
  - thunky 4y ago
    > a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. And remember it works both ways. It doesn't seem like it now, but sometimes, in some markets, it's hard for landlords to attract tenants. I have serious doubts that regulation or any other form of intervention on pricing would have anything but unintended consequences, in some cases leading to the exact problem you're trying to prevent: https://www.americanexperiment.org/new-york-landlords-are-keeping-apartments-off-the-market-due-to-rent-control/ https://www.americanexperiment.org/new-york-landlords-are-ke...
    - acdha 4y ago
      > I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. Oh, sure but the point is just that the market dynamics favor sellers pretty strongly. For example, how much does the hassle of moving or leaving a neighborhood deter the kind of negotiation which would normally be key to keeping a market stable? Note also that regulation doesn’t need to directly control pricing to make a difference. Since information asymmetry is a lot of the problem here, increased transparency could help improve the situation and give people better negotiating positions (e.g. if a building owner is profitable at 30% less than asking for all of the current leases, you can probably negotiate better with that information than if you don’t have it)

thunky 4y ago

> actions informed by their software Yes, informed. The output of this software, and Zillow's algorithms, is only information that still needs to be applied to the real world ("the market"). The algorithms just provide information that wasn't as easy to access before. It's like saying that Google is responsible for higher rents/prices because it allows landlords/homeowners to easily access and analyze market data. I don't think so.

richbell 4y ago
> Yes, informed. The output of this software, and Zillow's algorithms, is only information that still needs to be applied to the real world ("the market"). The algorithms just provide information that wasn't as easy to access before. Who verifies that the algorithm is correct? Who is culpable if the algorithm is flawed or applied incorrectly? If GreyStar or Zillow realized their algorithms were significantly inflating values, would there be any incentive to correct it without regulation? > It's like saying that Google is responsible for higher rents/prices because it allows landlords/homeowners to easily access and analyze market data. I don't think so. Except that information isn't readily available and easily accessible on Google (in many jurisdictios). It's locked away behind pricey subscriptions to vendor products. In the case of YieldStar it means that tenants cannot fairly negotiate because they don't know what a reasonable price is.
- thunky 4y ago
  > Who verifies that the algorithm is correct? You're not going to like this answer, but...the market does. The point is that no software has to power to force tenants to pay higher than market rents. edit to add: > In the case of YieldStar it means that tenants cannot fairly negotiate because they don't know what a reasonable price is. If that's the case, then the landlords could save the money they're spending on YieldStar and just set the high prices already. They could use their own proprietary "I want more money" algorithm, and the tenant would have no choice but to pay whatever number the landlord popped out of their head.
  - richbell 4y ago

WalterBright 4y ago

So, why don't landlords just double the rent? Heck, why not triple it?

richbell 4y ago
> So, why don't landlords just double the rent? Heck, why not triple it? I'm not sure where you're from but the rent in my area HAS more than doubled in the past few years.
- WalterBright 4y ago
  Since the market is inelastic, and landlords can charge whatever they want, make it 10x.
  - richbell 4y ago
    > Since the market is inelastic, and landlords can charge whatever they want, make it 10x. They'll get there, slowly and steadily. You obviously cannot snap your finger and raise the rent 10x in an instant. You have to boil the frog slowly, by continuously buying up properties and raise rents considerably every year, especially for new tenants. In my city the overwhelming majority of residential apartments are owned by a single private company. This is an especially profitable venture with trailer parks, which don't have as many pesky tenant rights or protections. E.g., https://www.newyorker.com/magazine/2021/03/15/what-happens-when-investment-firms-acquire-trailer-parks https://www.newyorker.com/magazine/2021/03/15/what-happens-w...
    - WalterBright 4y ago
      > You obviously cannot snap your finger and raise the rent 10x in an instant. Why not? Demand is inelastic, and people will be forced to pay it. Right?
      - richbell 4y ago
        > Why not? Demand is inelastic, and people will be forced to pay it. Right? You're clearly not engaging in good faith so continuing this discussion would be pointless.