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> Collusion, either by landlord syndicates or tenant strikes or whatever, doesn’t materially affect the market rents. Why? What is the logic behind this statem

> Collusion, either by landlord syndicates or tenant strikes or whatever, doesn’t materially affect the market rents. Why? What is the logic behind this statement?

jeffbee 4y ago
There are just way too many landlords to make it work. There is no single dominant landlord and no number of landlords small enough to fit around a conference table that controls a significant portion of the housing stock. Staying with my city of Berkeley, the notoriously abusive (seriously, Google it for some extreme horror stories) Everest Properties holds only 354 units. There are 30 different apartment owners who hold at least 100 units and 6000 total landlords. There's just no way with that diversity of ownership that collusion would amount to anything.
- hotpotamus 4y ago
  The allegation seems to be that RealPage was providing a service to solve the coordination problem you're elucidating.
  - jeffbee 4y ago
    I don't disagree and to be clear I don't think regulators should tolerate RealPage. But I also don't think that getting rid of RealPage will do anything about the rent crisis, since the estimates are the U.S. lacks between 4 and 80 million un-built homes. That's the root issue.
- jcrawfordor 4y ago
  The article directly contests this idea though: > In one downtown Seattle ZIP code, 70% of more than 9,000 apartments were controlled by just 10 property managers — every one of which used RealPage’s pricing software in at least some of its buildings. This seems true in a lot of hot rental markets - there actually aren't that many landlords. In my midsized city only 4-5 institutional landlords control most of the available units in the median price bracket (and that's for residential, commercial is even worse with just two large landlords controlling a majority of lower end small units). And then when they use Realpage they are all effectively pricing together, so it creates a near-monopoly that greatly curtails downward pressure on prices.
rsj_hn 4y ago
The idea of economic monopolies makes sense only for produced goods -- for example, diamonds, in which you influence what the market will bear by producing more or less. If you can get all the producers together to restrict supply, then they can charge higher prices because they are selling to a smaller subset of buyers (those willing to pay the most). But notice the coordination is never on price -- OPEC doesn't get together to say "We will all charge $90 for oil" -- they get together to say "We will decrease production by 1 million bpd". So price is the target but the actual control is not price, but quantity. The point of a monopoly is to manipulate the price by increasing or decreasing production, and this is why you need a produced good. Actual prices are set by whatever the market can bear. But there is no such thing -- even conceptually -- in a market for non-produced goods such as land. Now that doesn't mean they can't be in violation of some law -- maybe they were coordinating to exclude bad tenants based on a protected category or something like that. But then you will first object, "The land isn't produced, but the structure on the land is produced" and then I'll say that if there was an accusation of collusion among homebuilders, then you would have a point. But not landlords (there are many examples of monopolistic practices in housing, but in the form of zoning regulations). And then a second objection is "Renting also requires property management services to owners. Maybe there is a collusion among those providing property management to charge more" -- but they are charging the property owner, and it's a field with such relative low entrance bars that it's hard to imagine owners getting screwed by some collusion among property managers.

> Collusion, either by landlord syndicates or tenant strikes or whatever, doesn’t materially affect the market rents. Why? What is the logic behind this statement?

jeffbee 4y ago

There are just way too many landlords to make it work. There is no single dominant landlord and no number of landlords small enough to fit around a conference table that controls a significant portion of the housing stock. Staying with my city of Berkeley, the notoriously abusive (seriously, Google it for some extreme horror stories) Everest Properties holds only 354 units. There are 30 different apartment owners who hold at least 100 units and 6000 total landlords. There's just no way with that diversity of ownership that collusion would amount to anything.

hotpotamus 4y ago
The allegation seems to be that RealPage was providing a service to solve the coordination problem you're elucidating.
- jeffbee 4y ago
  I don't disagree and to be clear I don't think regulators should tolerate RealPage. But I also don't think that getting rid of RealPage will do anything about the rent crisis, since the estimates are the U.S. lacks between 4 and 80 million un-built homes. That's the root issue.
jcrawfordor 4y ago
The article directly contests this idea though: > In one downtown Seattle ZIP code, 70% of more than 9,000 apartments were controlled by just 10 property managers — every one of which used RealPage’s pricing software in at least some of its buildings. This seems true in a lot of hot rental markets - there actually aren't that many landlords. In my midsized city only 4-5 institutional landlords control most of the available units in the median price bracket (and that's for residential, commercial is even worse with just two large landlords controlling a majority of lower end small units). And then when they use Realpage they are all effectively pricing together, so it creates a near-monopoly that greatly curtails downward pressure on prices.

rsj_hn 4y ago

The idea of economic monopolies makes sense only for produced goods -- for example, diamonds, in which you influence what the market will bear by producing more or less. If you can get all the producers together to restrict supply, then they can charge higher prices because they are selling to a smaller subset of buyers (those willing to pay the most). But notice the coordination is never on price -- OPEC doesn't get together to say "We will all charge $90 for oil" -- they get together to say "We will decrease production by 1 million bpd". So price is the target but the actual control is not price, but quantity. The point of a monopoly is to manipulate the price by increasing or decreasing production, and this is why you need a produced good. Actual prices are set by whatever the market can bear. But there is no such thing -- even conceptually -- in a market for non-produced goods such as land. Now that doesn't mean they can't be in violation of some law -- maybe they were coordinating to exclude bad tenants based on a protected category or something like that. But then you will first object, "The land isn't produced, but the structure on the land is produced" and then I'll say that if there was an accusation of collusion among homebuilders, then you would have a point. But not landlords (there are many examples of monopolistic practices in housing, but in the form of zoning regulations). And then a second objection is "Renting also requires property management services to owners. Maybe there is a collusion among those providing property management to charge more" -- but they are charging the property owner, and it's a field with such relative low entrance bars that it's hard to imagine owners getting screwed by some collusion among property managers.