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Also around DC area, the leasing office folks told me that the price changed dynamically and could only be overruled by the HQ. They said that many companies us

Also around DC area, the leasing office folks told me that the price changed dynamically and could only be overruled by the HQ. They said that many companies use that software in order to obtain their "optimal" price for the area, which is of course observationally equivalent to colluding with extra steps. BTW, more recently I saw the same thing with large contractor companies. One quoted me an insane price for something and I asked why, and they replied that it's the price that the software (ServiceTitan) tells them to charge, and even showed me their screen. Again, they said ServiceTitan decides the price depending on "the average price of other companies in the area" which is code word for you-know-what.

devchix 3y ago
Am I missing the obvious here, a smart and nimble company can corner this market by lowering their price by X. They would have to give up X per unit but they make it up by (volume * lower_price). Isn't that how the market is supposed to work? Like if I want all the business and there's not an obvious differentiator I will compete on price?
- dchftcs 3y ago
  Not sure about smart, but the word "nimble" can never be used to described anything about real estate.
- junofan 3y ago
  Typically the price fixing part is one small feature of a large software suite, and deviations require written justification submitted to the provider (with the implied threat of losing access to the management software).
- koube 3y ago
  That's not how it works because there is no volume. You can't provide more supply if there's no supply to provide. Each building has a fixed number of units and the management for those buildings are trying to maximize the value they get out of each unit. Most cities have a mostly inelastic number of units and population grows every year, so you can pretty much charge whatever you want and people will pay it since there's no alternatives. Why doesn't someone just build a new building? Mostly they will be blocked by NIMBYism. NIMBYism is a near universal philsophy, to the point that renters who would benefit from this are typically NIMBYs too. Sometimes they're the loudest NIMBYs, It will be pretty much impossible to build anything new until the state takes control of building away from localities and forces them to allow building.
  - devchix 3y ago
    This assumes vacancy is at 0%, for cities like SF I can see this, but do all cities have near 0% vacancy rate? Genuine question, I don't know. I would offer at lower price and have all my units filled.

devchix 3y ago

Am I missing the obvious here, a smart and nimble company can corner this market by lowering their price by X. They would have to give up X per unit but they make it up by (volume * lower_price). Isn't that how the market is supposed to work? Like if I want all the business and there's not an obvious differentiator I will compete on price?

dchftcs 3y ago
Not sure about smart, but the word "nimble" can never be used to described anything about real estate.
junofan 3y ago
Typically the price fixing part is one small feature of a large software suite, and deviations require written justification submitted to the provider (with the implied threat of losing access to the management software).
koube 3y ago
That's not how it works because there is no volume. You can't provide more supply if there's no supply to provide. Each building has a fixed number of units and the management for those buildings are trying to maximize the value they get out of each unit. Most cities have a mostly inelastic number of units and population grows every year, so you can pretty much charge whatever you want and people will pay it since there's no alternatives. Why doesn't someone just build a new building? Mostly they will be blocked by NIMBYism. NIMBYism is a near universal philsophy, to the point that renters who would benefit from this are typically NIMBYs too. Sometimes they're the loudest NIMBYs, It will be pretty much impossible to build anything new until the state takes control of building away from localities and forces them to allow building.
- devchix 3y ago
  This assumes vacancy is at 0%, for cities like SF I can see this, but do all cities have near 0% vacancy rate? Genuine question, I don't know. I would offer at lower price and have all my units filled.