5 ms·

I think this policy is incomplete without ensuring there is enough competition to ensure that rents stay relatively affordable.

steveBK123 3y ago
more supply = more competition, no?
- lusus_naturae 3y ago
  It depends. If everything is owned by the same management or equity firm, then no.
  - ch4s3 3y ago
    The idea that a single firm or even a stable cartel could effectively control prices in a market as large as Boston is just naive.
    - PartiallyTyped 3y ago
      They can just run a cartel [1]. I don’t understand why anyone thinks things like housing can have any competition when housing is not a commodity but a necessity and the margins are rather thin with little to no space for efficiency and innovation, and private equity can just buy apartments and houses. > In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage. [1] https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
      - steveBK123 3y ago
        Property managers <> owners. RE investment is very hands on, and people hiring property managers to deal with it on their behalf. The idea that the top 10 own 70% of the market is not a shock. You could probably do this "top 10 own 70% of __ market" for literally anything.
        thfuran 3y ago
        I think you skipped the last clause of the sentence you're referencing (and forgot to look at the source). The real point is that one software vendor effectively controls all the pricing.
        PartiallyTyped 3y ago
        Notice that you omitted the important part: > every single one of which used pricing software sold by RealPage. Which makes this effectively a cartel.
    - LightBug1 3y ago
      De facto cartels ... what do you think is going on now around the world, let alone speculatively in Boston.
      - ethanbond 3y ago
        Not cartels. Rising productivity means everyone knows they can raise rents. No coordination necessary.
      - prepend 3y ago
        Not that.
    - tomrod 3y ago
      But if everyone uses the same software for rent or the same model to price housing...
  - steveBK123 3y ago
    Sure less owners is bad for competition, but more supply itself creates competition in a sense. Let's say theres 100 apartments in the entire town, and they are all owned by the same company. Next let's say they build 50 more apartments and theres now 1000 apartments still all owned by the same company. Given the number of apartments has increased, renters now have more power to negotiate as the owners have more units they need to fill. This is why Tesla for example is dropping prices as they produce more cars and they have inventory vs when they had 6-12 month backlog & scalpers were flipping used vehicles for more than new in 2021-2022. When supply is severely constrained, you end up with bidding wars for the finite goods.
    - HWR_14 3y ago
      > as the owners have more units they need to fill. Or they can leave the units empty. There's no reason all units must be filled.
    - maximinus_thrax 3y ago
      > Let's say theres 100 apartments in the entire town, and they are all owned by the same company. Next let's say they build 50 more apartments and theres now 1000 apartments still all owned by the same company. Given the number of apartments has increased, renters now have more power to negotiate as the owners have more units they need to fill. Unfortunately, that's not what is happening on the ground. In my town, they've built hundreds of units over the past years and rent has gone up. The building facing mine was newly built and I went there to see if I can score some deal and they did not budge at all. Half the building was kept empty for about a year, until the new generations of tech workers moved to the area to occupy them. It's a numbers game but not the way you think. It's often more lucrative to lose money in the short term but still keep rent expensive for the future. This is why owners are being sued right now for price fixing by using Realpage. See https://mynorthwest.com/3719431/property-owners-accused-of-price-fixing-rent-in-seattle/ https://mynorthwest.com/3719431/property-owners-accused-of-p...
      - steveBK123 3y ago
        I think a lot of people mistake cause & effect. What if the housing is being built because they expect rent to go up? If supply went up say 5% and rent went up 10%, what do people think would have happened in the 0% supply increase mirror universe? People can't just make you spend money. US has been underbuilding housing, especially in blue coastal cities, for generations. The last 25 years has seen a big move back to these cities where everything is getting bid up. And then the surrounding burbs, commuter built, secondary cities, etc follow suit.
  - dghughes 3y ago
    A REIT is the worst. One in my town is demanding a 20% rent increase. And also asking for tax breaks. Half the tenants will have to move and their tax money is going to the company forcing them out. The people in the building are in well paying jobs like IT professions not low income or elderly (but they are also facing the same thing).
- bmitc 3y ago
  I have never seen more supply of apartments make existing rents go down. I had a friend's rent go up 25% in one year in an area that has seen a huge amount of apartment buildings go up. That's not rational. The companies that own these apartment buildings care about nothing more than more money and know that they'll be able to find someone to pay the exhorbant prices.
  - vkou 3y ago
    Prices in his area went up, because of gentrification, but it relaxed demand in other parts of the city. Even if prices in other parts went up, they would have gone up even more if there had been no construction.
  - crmd 3y ago
    Same in New York City where I live. A major reason is that the demand curve is effectively vertical - people here who would like to buy a home to live in are not competing just with other residents but with a global investor class who want to park capital in NYC property (and expect an appreciation rate that far exceeds inflation).
  - beastman82 3y ago
    Supply and demand is the oldest, most obvious economic relationship in existence.
    - bmitc 3y ago
      And yet it doesn't correctly model the situation. This isn't rabbits and foxes.
  - thrill 3y ago
    "know that they'll be able to find someone to pay" So, you're saying the demand remains greater than the supply?
    - bmitc 3y ago
      What are you getting at? That is not necessarily the only conclusion that supports that, but it is one. A lot of urban designers just think that building apartment buildings will help with the demand problem in the same way that people think building highways alleviates congestion, which perhaps surprisingly urban designers know that that doesn't work for highways. And I see no evidence, at least in big metropolitan areas like Boston with a huge amount of attraction, that building supply does anything to ease demand. If anything, it increases it. I would argue that demand in major cities will never go down. In particular, the greater Boston area has more than 500,000 college students. Many of those graduate and stay and work in the area and many more graduates move into the greater Boston area to work. It's a big area with lots of growing fields with a lot of professional people moving into. Demand is simply not going to go down for apartments, and the demand for housing shows no signs of slowing either. A bit of my point was that landlords siphon off money from society knowing how important housing is to people and will charge the absolute maximum they can get away with. It's predatory.

steveBK123 3y ago

more supply = more competition, no?

lusus_naturae 3y ago
It depends. If everything is owned by the same management or equity firm, then no.
- ch4s3 3y ago
  The idea that a single firm or even a stable cartel could effectively control prices in a market as large as Boston is just naive.
  - PartiallyTyped 3y ago
    They can just run a cartel [1]. I don’t understand why anyone thinks things like housing can have any competition when housing is not a commodity but a necessity and the margins are rather thin with little to no space for efficiency and innovation, and private equity can just buy apartments and houses. > In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage. [1] https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
    - steveBK123 3y ago
      Property managers <> owners. RE investment is very hands on, and people hiring property managers to deal with it on their behalf. The idea that the top 10 own 70% of the market is not a shock. You could probably do this "top 10 own 70% of __ market" for literally anything.
      - thfuran 3y ago
        I think you skipped the last clause of the sentence you're referencing (and forgot to look at the source). The real point is that one software vendor effectively controls all the pricing.
      - PartiallyTyped 3y ago
        Notice that you omitted the important part: > every single one of which used pricing software sold by RealPage. Which makes this effectively a cartel.
  - LightBug1 3y ago
    De facto cartels ... what do you think is going on now around the world, let alone speculatively in Boston.
    - ethanbond 3y ago
      Not cartels. Rising productivity means everyone knows they can raise rents. No coordination necessary.
    - prepend 3y ago
      Not that.
  - tomrod 3y ago
    But if everyone uses the same software for rent or the same model to price housing...
- steveBK123 3y ago
  Sure less owners is bad for competition, but more supply itself creates competition in a sense. Let's say theres 100 apartments in the entire town, and they are all owned by the same company. Next let's say they build 50 more apartments and theres now 1000 apartments still all owned by the same company. Given the number of apartments has increased, renters now have more power to negotiate as the owners have more units they need to fill. This is why Tesla for example is dropping prices as they produce more cars and they have inventory vs when they had 6-12 month backlog & scalpers were flipping used vehicles for more than new in 2021-2022. When supply is severely constrained, you end up with bidding wars for the finite goods.
  - HWR_14 3y ago
    > as the owners have more units they need to fill. Or they can leave the units empty. There's no reason all units must be filled.
  - maximinus_thrax 3y ago
    > Let's say theres 100 apartments in the entire town, and they are all owned by the same company. Next let's say they build 50 more apartments and theres now 1000 apartments still all owned by the same company. Given the number of apartments has increased, renters now have more power to negotiate as the owners have more units they need to fill. Unfortunately, that's not what is happening on the ground. In my town, they've built hundreds of units over the past years and rent has gone up. The building facing mine was newly built and I went there to see if I can score some deal and they did not budge at all. Half the building was kept empty for about a year, until the new generations of tech workers moved to the area to occupy them. It's a numbers game but not the way you think. It's often more lucrative to lose money in the short term but still keep rent expensive for the future. This is why owners are being sued right now for price fixing by using Realpage. See https://mynorthwest.com/3719431/property-owners-accused-of-price-fixing-rent-in-seattle/ https://mynorthwest.com/3719431/property-owners-accused-of-p...
    - steveBK123 3y ago
      I think a lot of people mistake cause & effect. What if the housing is being built because they expect rent to go up? If supply went up say 5% and rent went up 10%, what do people think would have happened in the 0% supply increase mirror universe? People can't just make you spend money. US has been underbuilding housing, especially in blue coastal cities, for generations. The last 25 years has seen a big move back to these cities where everything is getting bid up. And then the surrounding burbs, commuter built, secondary cities, etc follow suit.
- dghughes 3y ago
  A REIT is the worst. One in my town is demanding a 20% rent increase. And also asking for tax breaks. Half the tenants will have to move and their tax money is going to the company forcing them out. The people in the building are in well paying jobs like IT professions not low income or elderly (but they are also facing the same thing).
bmitc 3y ago
I have never seen more supply of apartments make existing rents go down. I had a friend's rent go up 25% in one year in an area that has seen a huge amount of apartment buildings go up. That's not rational. The companies that own these apartment buildings care about nothing more than more money and know that they'll be able to find someone to pay the exhorbant prices.
- vkou 3y ago
  Prices in his area went up, because of gentrification, but it relaxed demand in other parts of the city. Even if prices in other parts went up, they would have gone up even more if there had been no construction.
- crmd 3y ago
  Same in New York City where I live. A major reason is that the demand curve is effectively vertical - people here who would like to buy a home to live in are not competing just with other residents but with a global investor class who want to park capital in NYC property (and expect an appreciation rate that far exceeds inflation).
- beastman82 3y ago
  Supply and demand is the oldest, most obvious economic relationship in existence.
  - bmitc 3y ago
    And yet it doesn't correctly model the situation. This isn't rabbits and foxes.
- thrill 3y ago
  "know that they'll be able to find someone to pay" So, you're saying the demand remains greater than the supply?
  - bmitc 3y ago
    What are you getting at? That is not necessarily the only conclusion that supports that, but it is one. A lot of urban designers just think that building apartment buildings will help with the demand problem in the same way that people think building highways alleviates congestion, which perhaps surprisingly urban designers know that that doesn't work for highways. And I see no evidence, at least in big metropolitan areas like Boston with a huge amount of attraction, that building supply does anything to ease demand. If anything, it increases it. I would argue that demand in major cities will never go down. In particular, the greater Boston area has more than 500,000 college students. Many of those graduate and stay and work in the area and many more graduates move into the greater Boston area to work. It's a big area with lots of growing fields with a lot of professional people moving into. Demand is simply not going to go down for apartments, and the demand for housing shows no signs of slowing either. A bit of my point was that landlords siphon off money from society knowing how important housing is to people and will charge the absolute maximum they can get away with. It's predatory.