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This ignores the possibility of housing stock consolidating, and price-fixing, which can keep rents artificially inflated by just keeping capacity off the marke

This ignores the possibility of housing stock consolidating, and price-fixing, which can keep rents artificially inflated by just keeping capacity off the markets. Example: https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...

ericd 4y ago
I'm somewhat familiar with YieldStar and other dynamic rent-setting systems. I don't think it qualifies as price fixing, in that only a small percentage of the available stock uses it. If a large percentage used it, then maybe there'd be a case for it, since I'm guessing it uses advertised rents of nearby availabilities in addition to the in-building measures, so it'd be playing off of itself. But that wasn't the case when I left the industry, guessing it's still primarily big REITs that use it. It's pretty hard to get small landlords to use any tech at all, and they represent a huge portion of the market. If housing stock expanded a lot, landlords would lose the pricing power that YieldStar is taking advantage of. The lack of surplus housing in desirable areas is the root problem, and the difficulty of getting new high density housing projects approved and developed in those areas is at the core of that. The vacancy rate of rental housing nationwide has been dropping for years, and that includes a lot of places where people aren't clamoring to live.
- yterdy 4y ago
  I see it as a form of a stand-alone complex. There are multiple companies engaging in this behavior, independently, but resulting in what resembles a concerted effort. However, for renters (and their representatives in government), the concern isn't so much that it's an accident of spookily aligned intent/incentives as it is that 1) it's clearly pushing up rents (beyond affordability), and 2) the companies engaging in it are aware that something they are doing is helping to drive these increases.[1] I'll also note that a falling occupancy rate is not mutually exclusive with the alleged practice of property managers warehousing inventory to prop up pricing. I also wonder how much the common practice of offering "new renter specials", rather than simply lowering rents to meet demand, contributes to ever-increasing "market rates." 1:https://web.archive.org/web/20220127071929/https://www.entrata.com/docs/spec_sheets/entrataPricing.pdf https://web.archive.org/web/20220127071929/https://www.entra...
  - ericd 4y ago
    The percentage of landlords using it is likely too small to have the ability to engage in price fixing. They drive prices up, but only because the market clearing price in a lot of cities is higher than where they're currently priced. Do you have a source for property managers warehousing housing inventory? It doesn't ring true, at all.
    - yterdy 4y ago
      I did a check of my municipality. 80% of the apartment complexes in the area use 3rd-party software of the like in question for their property management. Their capture of the market is likely sufficient to drive prices, which is why at least one company (RealPage) is facing multiple lawsuits alleging price-fixing. As for warehousing, it is a known issue in NYC and likely used in other places. I wonder what your interest is in handwaving these issues which are well-known and being acted on. You seem knowledgable except where it would tend to hurt your argument that everything is as it should be. What say you on rent specials?
      - ericd 4y ago
        I don’t have any interest in it, it’s just not my understanding of the market. If I can help people avoid an inaccurate understanding of the world, I’ll try to help that, and if I’m the wrong one, then maybe I can learn and change my mind. I could certainly be wrong, it’s been a while since I worked on this stuff. When you say 80%, what are you using to find those/take that survey? I’d just keep in mind that a lot of sites only show listings from buildings that are willing to pay, and there’s a high correlation with professionally managed buildings. This is also why you should never trust stats sourced from those sites, they don’t have a representative view of the market (a lot of news stories cite them uncritically when talking about rent trends). Warehousing, care to cite something so I can read about it? Rent specials are an easy way to adjust rent downward, without adjusting rent downward. If they rent to someone at a lower rate, then it’s a long term rather temporary discount. What are you wondering about it?
        4y ago
bdw5204 4y ago
One of the ways to address that is to tax vacant housing units. For example, you could double the property taxes for any house that is vacant for more than x days out of a year and the x could be surprisingly high. For multi-unit properties, the property taxes could be multiplied by 1.y where y is the percentage of vacant units or by 2 if all properties are vacant. The revenues from the tax can then go towards a good cause like funding homeless shelters. If there's a need to not only put capacity on the market but fill it, the market will drive rent prices down because it is better to get something for your vacant unit than pay double the property taxes. If that doesn't work and there's still tons of vacant housing stock that is being held off the market to drive up rent, you can always keep raising the vacant housing tax until it works.
kilotaras 4y ago
Making building more homes easier addresses this. Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view. There's very strong incentive to defect from "optimal vacancy rate" and eat outsized profit compared to the rest of competition. Making building easier makes consolidation harder, as outsiders are now potential defectors as well. AFAIK we're not in monopoly situation (yet?) for rental properties. Most of YieldStar value proposition on the other hand is ultimately just a price discovery mechanism. Prices raise because people *are willing* to pay that much for apartment. People are willing to pay that much, because supply doesn't keep with demand.
- ericd 4y ago
  Yep, well put. It's only able to boost rents because the market clearing rate is higher than it is. Vacancy is extremely expensive, and there are too many small market participants to make it worth taking vacancy in exchange for boosting the rents on the other units.

ericd 4y ago

I'm somewhat familiar with YieldStar and other dynamic rent-setting systems. I don't think it qualifies as price fixing, in that only a small percentage of the available stock uses it. If a large percentage used it, then maybe there'd be a case for it, since I'm guessing it uses advertised rents of nearby availabilities in addition to the in-building measures, so it'd be playing off of itself. But that wasn't the case when I left the industry, guessing it's still primarily big REITs that use it. It's pretty hard to get small landlords to use any tech at all, and they represent a huge portion of the market. If housing stock expanded a lot, landlords would lose the pricing power that YieldStar is taking advantage of. The lack of surplus housing in desirable areas is the root problem, and the difficulty of getting new high density housing projects approved and developed in those areas is at the core of that. The vacancy rate of rental housing nationwide has been dropping for years, and that includes a lot of places where people aren't clamoring to live.

yterdy 4y ago
I see it as a form of a stand-alone complex. There are multiple companies engaging in this behavior, independently, but resulting in what resembles a concerted effort. However, for renters (and their representatives in government), the concern isn't so much that it's an accident of spookily aligned intent/incentives as it is that 1) it's clearly pushing up rents (beyond affordability), and 2) the companies engaging in it are aware that something they are doing is helping to drive these increases.[1] I'll also note that a falling occupancy rate is not mutually exclusive with the alleged practice of property managers warehousing inventory to prop up pricing. I also wonder how much the common practice of offering "new renter specials", rather than simply lowering rents to meet demand, contributes to ever-increasing "market rates." 1:https://web.archive.org/web/20220127071929/https://www.entrata.com/docs/spec_sheets/entrataPricing.pdf https://web.archive.org/web/20220127071929/https://www.entra...
- ericd 4y ago
  The percentage of landlords using it is likely too small to have the ability to engage in price fixing. They drive prices up, but only because the market clearing price in a lot of cities is higher than where they're currently priced. Do you have a source for property managers warehousing housing inventory? It doesn't ring true, at all.
  - yterdy 4y ago
    I did a check of my municipality. 80% of the apartment complexes in the area use 3rd-party software of the like in question for their property management. Their capture of the market is likely sufficient to drive prices, which is why at least one company (RealPage) is facing multiple lawsuits alleging price-fixing. As for warehousing, it is a known issue in NYC and likely used in other places. I wonder what your interest is in handwaving these issues which are well-known and being acted on. You seem knowledgable except where it would tend to hurt your argument that everything is as it should be. What say you on rent specials?
    - ericd 4y ago
      I don’t have any interest in it, it’s just not my understanding of the market. If I can help people avoid an inaccurate understanding of the world, I’ll try to help that, and if I’m the wrong one, then maybe I can learn and change my mind. I could certainly be wrong, it’s been a while since I worked on this stuff. When you say 80%, what are you using to find those/take that survey? I’d just keep in mind that a lot of sites only show listings from buildings that are willing to pay, and there’s a high correlation with professionally managed buildings. This is also why you should never trust stats sourced from those sites, they don’t have a representative view of the market (a lot of news stories cite them uncritically when talking about rent trends). Warehousing, care to cite something so I can read about it? Rent specials are an easy way to adjust rent downward, without adjusting rent downward. If they rent to someone at a lower rate, then it’s a long term rather temporary discount. What are you wondering about it?
      - 4y ago

bdw5204 4y ago

One of the ways to address that is to tax vacant housing units. For example, you could double the property taxes for any house that is vacant for more than x days out of a year and the x could be surprisingly high. For multi-unit properties, the property taxes could be multiplied by 1.y where y is the percentage of vacant units or by 2 if all properties are vacant. The revenues from the tax can then go towards a good cause like funding homeless shelters. If there's a need to not only put capacity on the market but fill it, the market will drive rent prices down because it is better to get something for your vacant unit than pay double the property taxes. If that doesn't work and there's still tons of vacant housing stock that is being held off the market to drive up rent, you can always keep raising the vacant housing tax until it works.

kilotaras 4y ago

Making building more homes easier addresses this. Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view. There's very strong incentive to defect from "optimal vacancy rate" and eat outsized profit compared to the rest of competition. Making building easier makes consolidation harder, as outsiders are now potential defectors as well. AFAIK we're not in monopoly situation (yet?) for rental properties. Most of YieldStar value proposition on the other hand is ultimately just a price discovery mechanism. Prices raise because people *are willing* to pay that much for apartment. People are willing to pay that much, because supply doesn't keep with demand.

ericd 4y ago
Yep, well put. It's only able to boost rents because the market clearing rate is higher than it is. Vacancy is extremely expensive, and there are too many small market participants to make it worth taking vacancy in exchange for boosting the rents on the other units.