5 ms·

Interestingly, the people at that company doing the actual economic research into pricing are saying what everyone else is: > The surge in apartment constructi

by davidw 3y ago

Interestingly, the people at that company doing the actual economic research into pricing are saying what everyone else is: > The surge in apartment construction is softening the Class B market more than any other asset class. In high-supply submarkets, Class B rents fell more than twice as much as Class A over the past year. Yet in submarkets with no new supply, Class B performed right in line with Class A. https://www.realpage.com/analytics/class-b-market-softening/ https://www.realpage.com/analytics/class-b-market-softening/ This is pretty much in line with what economists everywhere are telling us: https://www.washingtonpost.com/opinions/2023/10/20/housing-shortage-cities-build-more/ https://www.washingtonpost.com/opinions/2023/10/20/housing-s... Not to defend the company; if they caught them trying to fiddle things, throw the book at them. But I just don't see their software being powerful enough to manipulate prices that far out of line with the market. You can't charge San Francisco prices in Baltimore. Of course, people want a Big Bad, a bogeyman to blame for the housing crisis, not 100's of small decisions in their city and state regarding zoning and taxes and so on that has shaped the North American city over the past 100 years.

soperj 3y ago
The software is recommending keeping units empty in areas with rental shortages because it pushes up prices.
- testfoobar 3y ago
  There is nothing wrong with keeping units empty to manage overall rental yield. It becomes an issue if a group of landlords agree not to rent below a certain threshold in a community. This is classic price fixing - leaving renters no alternative other than paying the minimum rate set.
  - tristor 3y ago
    > It becomes an issue if a group of landlords agree not to rent below a certain threshold in a community. This is classic price fixing - leaving renters no alternative other than paying the minimum rate set. This is exactly what's happening, though. Landlords using RealPage/YieldStar are required to follow its guidelines and need permissions from the company to make exceptions. It's technology mediated collusion to price-fix.
  - Pannoniae 3y ago
    "There is nothing wrong with keeping units empty to manage overall rental yield." Heavily disagree. There is everything wrong with that. Housing should not be an investment or a profit source at all
    - WalterBright 3y ago
      > Housing should not be an investment or a profit source at all Who would build housing, then?
      - stefan_ 3y ago
        People who need housing? It's what they call a necessity good. We get it, you have rentals - maybe it would do you some good to read more and write less.
        WalterBright 3y ago
        You built your own housing? > We get it, you have rentals Nope.
      - hirako2000 3y ago
        The soon to be occupiers would build them. Like they did in most places for most of human history
        davidw 3y ago
        We're well past the age when someone can do a reasonable job of slapping together some logs. It's fine if people make a profit at providing essential goods as long as there's enough surplus to redistribute to those who markets can't reach. No one complains about farmers profiting from farms. We care about people going hungry, so we buy some food from tax revenues and help feed them.
        hirako2000 3y ago
        It was an answer to the rhetorical comment that if housing stopped yielding a return on investment then there would be no housing. I don't see the possible parallel with farmers, all there is in common is land potentially owned as property. Farmers bear fruits through labour. Real estate investors bear returns on capital. That's interesting you mention some people going hungry, most people's inability to slap logs together to make shelter, and resorting to tax collection and distribution.
  - bigtex88 3y ago
    The issue is rent-seeking. This is the basest form of rent-seeking and the downstream effects are felt by the entire economy. So yes, there is something wrong with it. Instead of letting the prices float to the settling rate of the market, they're being manipulated to reach a specific financial goal. That is morally reprehensible, especially when it comes to shelter.
  - soperj 3y ago
    > There is nothing wrong with keeping units empty to manage overall rental yield. That's like saying there's nothing wrong from profiteering during a crisis. Are you for stores drastically increasing prices on essentials like water and food during a natural disaster?
    - WalterBright 3y ago
      Yes, there is nothing wrong with it. Here's the thing. When there's a natural disaster, it used to be that everybody outside the disaster zone would fill jerry cans with gas, load up their pickup trucks with supplies, and immediately drive into the disaster zone and sell it with high prices. They'd get there far faster than the government. With the anti-gouging laws, nobody bothers doing that anymore. The result is (pick one): 1. no anti-gouging laws. Gas and supplies are available. 2. anti-gouging laws. No supplies are available. In which case are the people needing supplies better off?
      - soperj 3y ago
        So it used to be that rich people were able to get supplies previously, and now rich people are in the same situation that the poor people were always in?
        pempem 3y ago
        It used to be that rich(er) people would get more supplies than they needed and sell them. It still is.
        WalterBright 3y ago
        Under gas rationing in WW2, people would sell the gas they didn't need at high prices in the black market. Along with the black market came crime, because it was illegal.
        WalterBright 3y ago
        Think "black market". The Soviet Union all had prices set by the government, but nothing for sale. The economy subsisted on the illegal black market. Do you really think that's better?
  - deleted 3y ago
    [deleted]
  - UncleMeat 3y ago
    Landlords should serve the public. "We will provide less service to the public so we can make more money" is horseshit. Deliberately limiting access to a critical human resource should be criminal.
trevwilson 3y ago
I don't disagree that more housing supply is broadly the best way to combat rising rent, but if the numbers cited in the linked article are even close to true then I don't think it's surprising to think their software could meaningfully impact the market (for high-density housing at the very least): > The collaboration "amounts to a District-wide housing cartel," Schwalb said, noting that "well over" 30 percent of buildings with five or more units use RealPage's software, along with 60 percent of 50-unit-plus buildings. Across a wider Washington-Arlington-Alexandria area, more than 90 percent of units in large buildings are subject to RealPage pricing, according to Schwalb's office.
- testfoobar 3y ago
  Using a third party to set a community wide price level is something to carefully examine in court. Because such a setup could be used as a price fixing cartel with extra steps and plausible deniability for all parties.
  - davidw 3y ago
    Yes, it should be interesting to hear what comes out. I'm not here to defend them. It's possible that, at the margin, their system helps gouge renters a few percentage points. They should be stopped from doing that. But the broad wins are still with abundant housing. As with much else, it's not either or... build more, and put a stop to this kind of thing if they find they are able to manipulate markets.
burkaman 3y ago
If the problem was caused by 100s of small decisions, then we need 100s of small solutions. I don't see why one of those can't be disallowing "more than 90 percent of units in large buildings" from sharing software that encourages them to agree on an artificially high rent floor. You can't charge San Fransisco prices in Baltimore, but you can charge 10% higher than the local market price if you get enough landlords on board, which they did.
- davidw 3y ago
  Absolutely. But as below, my guess is that it's a few % points. Worth fixing for sure, but I'm also wary of 'bogeyman thinking' where people think this 'one thing' is going to solve the problem. The reality is that we need a lot more housing of all shapes and sizes and that is going to take a lot of work.
  - burkaman 3y ago
    I guess that's fair, although I haven't seen any bogeyman thinking in the complaint or article or comments yet. I'd recommend reading the linked Propublica investigation though, it's more than a few percentage points.
    - davidw 3y ago
      Oh, I wasn't referring to the complaint at all. That's correctly focused on the issue at hand. What I mean is the casual observer wondering why housing prices are bad. Blackrock, AirBnB, this outfit... people want to blame someone besides the local and state politics that got them where they are: https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/ https://www.theatlantic.com/ideas/archive/2023/01/housing-cr...
renewiltord 3y ago
I agree. It’s traditional to want to blame other people while voting in policies that harm oneself. If it were easier to build housing, someone would always eat the margin here. Lead times are short these days since you can have a lot of stuff prefabbed. The hard part is usually permits and the like. You can put up a new apartment tower in a year given that permits will be zero problem. I think even wood-framed CLT type buildings can go up in that time frame. A precast concrete building could be done in half that time or less.
- cvalka 3y ago
  +1

by davidw 3y ago

soperj 3y ago

The software is recommending keeping units empty in areas with rental shortages because it pushes up prices.

testfoobar 3y ago
There is nothing wrong with keeping units empty to manage overall rental yield. It becomes an issue if a group of landlords agree not to rent below a certain threshold in a community. This is classic price fixing - leaving renters no alternative other than paying the minimum rate set.
- tristor 3y ago
  > It becomes an issue if a group of landlords agree not to rent below a certain threshold in a community. This is classic price fixing - leaving renters no alternative other than paying the minimum rate set. This is exactly what's happening, though. Landlords using RealPage/YieldStar are required to follow its guidelines and need permissions from the company to make exceptions. It's technology mediated collusion to price-fix.
- Pannoniae 3y ago
  "There is nothing wrong with keeping units empty to manage overall rental yield." Heavily disagree. There is everything wrong with that. Housing should not be an investment or a profit source at all
  - WalterBright 3y ago
    > Housing should not be an investment or a profit source at all Who would build housing, then?
    - stefan_ 3y ago
      People who need housing? It's what they call a necessity good. We get it, you have rentals - maybe it would do you some good to read more and write less.
      - WalterBright 3y ago
        You built your own housing? > We get it, you have rentals Nope.
    - hirako2000 3y ago
      The soon to be occupiers would build them. Like they did in most places for most of human history
      - davidw 3y ago
        We're well past the age when someone can do a reasonable job of slapping together some logs. It's fine if people make a profit at providing essential goods as long as there's enough surplus to redistribute to those who markets can't reach. No one complains about farmers profiting from farms. We care about people going hungry, so we buy some food from tax revenues and help feed them.
        hirako2000 3y ago
        It was an answer to the rhetorical comment that if housing stopped yielding a return on investment then there would be no housing. I don't see the possible parallel with farmers, all there is in common is land potentially owned as property. Farmers bear fruits through labour. Real estate investors bear returns on capital. That's interesting you mention some people going hungry, most people's inability to slap logs together to make shelter, and resorting to tax collection and distribution.
- bigtex88 3y ago
  The issue is rent-seeking. This is the basest form of rent-seeking and the downstream effects are felt by the entire economy. So yes, there is something wrong with it. Instead of letting the prices float to the settling rate of the market, they're being manipulated to reach a specific financial goal. That is morally reprehensible, especially when it comes to shelter.
- soperj 3y ago
  > There is nothing wrong with keeping units empty to manage overall rental yield. That's like saying there's nothing wrong from profiteering during a crisis. Are you for stores drastically increasing prices on essentials like water and food during a natural disaster?
  - WalterBright 3y ago
    Yes, there is nothing wrong with it. Here's the thing. When there's a natural disaster, it used to be that everybody outside the disaster zone would fill jerry cans with gas, load up their pickup trucks with supplies, and immediately drive into the disaster zone and sell it with high prices. They'd get there far faster than the government. With the anti-gouging laws, nobody bothers doing that anymore. The result is (pick one): 1. no anti-gouging laws. Gas and supplies are available. 2. anti-gouging laws. No supplies are available. In which case are the people needing supplies better off?
    - soperj 3y ago
      So it used to be that rich people were able to get supplies previously, and now rich people are in the same situation that the poor people were always in?
      - pempem 3y ago
        It used to be that rich(er) people would get more supplies than they needed and sell them. It still is.
        WalterBright 3y ago
        Under gas rationing in WW2, people would sell the gas they didn't need at high prices in the black market. Along with the black market came crime, because it was illegal.
      - WalterBright 3y ago
        Think "black market". The Soviet Union all had prices set by the government, but nothing for sale. The economy subsisted on the illegal black market. Do you really think that's better?
- deleted 3y ago
  [deleted]
- UncleMeat 3y ago
  Landlords should serve the public. "We will provide less service to the public so we can make more money" is horseshit. Deliberately limiting access to a critical human resource should be criminal.

trevwilson 3y ago

I don't disagree that more housing supply is broadly the best way to combat rising rent, but if the numbers cited in the linked article are even close to true then I don't think it's surprising to think their software could meaningfully impact the market (for high-density housing at the very least): > The collaboration "amounts to a District-wide housing cartel," Schwalb said, noting that "well over" 30 percent of buildings with five or more units use RealPage's software, along with 60 percent of 50-unit-plus buildings. Across a wider Washington-Arlington-Alexandria area, more than 90 percent of units in large buildings are subject to RealPage pricing, according to Schwalb's office.

testfoobar 3y ago
Using a third party to set a community wide price level is something to carefully examine in court. Because such a setup could be used as a price fixing cartel with extra steps and plausible deniability for all parties.
- davidw 3y ago
  Yes, it should be interesting to hear what comes out. I'm not here to defend them. It's possible that, at the margin, their system helps gouge renters a few percentage points. They should be stopped from doing that. But the broad wins are still with abundant housing. As with much else, it's not either or... build more, and put a stop to this kind of thing if they find they are able to manipulate markets.

burkaman 3y ago

If the problem was caused by 100s of small decisions, then we need 100s of small solutions. I don't see why one of those can't be disallowing "more than 90 percent of units in large buildings" from sharing software that encourages them to agree on an artificially high rent floor. You can't charge San Fransisco prices in Baltimore, but you can charge 10% higher than the local market price if you get enough landlords on board, which they did.

davidw 3y ago
Absolutely. But as below, my guess is that it's a few % points. Worth fixing for sure, but I'm also wary of 'bogeyman thinking' where people think this 'one thing' is going to solve the problem. The reality is that we need a lot more housing of all shapes and sizes and that is going to take a lot of work.
- burkaman 3y ago
  I guess that's fair, although I haven't seen any bogeyman thinking in the complaint or article or comments yet. I'd recommend reading the linked Propublica investigation though, it's more than a few percentage points.
  - davidw 3y ago
    Oh, I wasn't referring to the complaint at all. That's correctly focused on the issue at hand. What I mean is the casual observer wondering why housing prices are bad. Blackrock, AirBnB, this outfit... people want to blame someone besides the local and state politics that got them where they are: https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/ https://www.theatlantic.com/ideas/archive/2023/01/housing-cr...

renewiltord 3y ago

I agree. It’s traditional to want to blame other people while voting in policies that harm oneself. If it were easier to build housing, someone would always eat the margin here. Lead times are short these days since you can have a lot of stuff prefabbed. The hard part is usually permits and the like. You can put up a new apartment tower in a year given that permits will be zero problem. I think even wood-framed CLT type buildings can go up in that time frame. A precast concrete building could be done in half that time or less.

cvalka 3y ago
+1