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There’s a lot of PE activity in this sector imo. They buy out all these established places and jack up the prices. It goes from calling them to book to some po

There’s a lot of PE activity in this sector imo. They buy out all these established places and jack up the prices. It goes from calling them to book to some polished booking portal. It’s mostly catered towards those who can afford it, so the 200k base SWE x 2 family can afford the 2x jacked up prices, and they continue increasing the prices every 1-2 years.

blakesterz 1y ago
That was my first thought as well. I know PE is famously eating up Vets, I wonder if they've started on these too?
- andrepd 1y ago
  It's so great living in the ~best~ only system for organising the economy. Working people can't afford homes or starting a family, but at least we are generating amazing value for shareholders.
  - orangecat 1y ago
    Working people can't afford homes Always amusing that this is the go-to argument against free markets, when the major cause of housing unaffordability is that governments prevent housing from being built.
    - csa 1y ago
      > Always amusing that this is the go-to argument against free markets, when the major cause of housing unaffordability is that governments prevent housing from being built. I’m not sure where you live, but in my little corner of California, this is not the major problem. The bottleneck is builders. There are requests from local government for affordable housing all the time, but builders earn more on the higher end stuff. The governments are starting to do workarounds by bundling high end developments with affordable housing, so I hope that works moving forward. Source: My buddy who is a general contractor. I don’t know how this works, but he has pointed out local examples to me.
      - ProfessorLayton 1y ago
        Builders may earn more making "higher end stuff" but the people who can afford those units can also afford the less expensive ones, pricing everyone else out. More housing, regardless if it's affordable or not helps keep prices in check. Dictating what builders can make, if they can at all, is a large reason housing prices have gotten out of hand.
      - kcb 1y ago
        So the response of the government is to add even more rules and limitations to building housing…
        csa 1y ago
        > So the response of the government is to add even more rules and limitations to building housing… I mean… they are rules, but not limits. Low-income housing is being built. All of the locals I know consider it a win. Note that “low income” housing qualification here is about $60k for a single person (often retirees) and $120k+ for a family of four.
      - bombcar 1y ago
        Builders gonna build for most profit. Why wouldn’t they? But if they build tons, the older stock drops in value. Nobody is paying $500k for a 20 year old house if a brand new one is available for $500k next door.
        csa 1y ago
        > But if they build tons, the older stock drops in value. Maybe I wasn’t clear. The local builders are at capacity. They literally can’t build any more. > Nobody is paying $500k for a 20 year old house if a brand new one is available for $500k next door. People are paying $700k for a 70 yo 750 sq ft house in a mediocre neighborhood, and $1m+ for a 50 yo 1000+ sq fr house. New houses start at $1.5m and quickly go up from there. Most of the new housing is not in the most desirable neighborhoods (there is no space to build new SFH housing in there), so the houses in the better, established neighborhoods are holding their prices. Note that the prices might be lower than the new houses (sometimes), but they are not going down. A result of this, using your example, is that there are rarely comparable old and new houses at similar prices.
orangecat 1y ago
They buy out all these established places and jack up the prices Is the theory here that the previous owners were altruistically pricing below what the market would bear?
- joncrocks 1y ago
  I think the theory is that they buy up a significant portion of the market, i.e. consolidate lots of independents. Then they raise prices in concert, and take advantage of reduced competition.
  - em500 1y ago
    Wouldn't that create a good opportunity for people to start new pet cares, and undercut the presumably overprized PE-consolidated chains? Pet care doesn't seem to be highly regulated or have other high barriers to entry AFAIK.
    - BobaFloutist 1y ago
      PE seems to do well in industries where consumer choice has a good amount of inertia, where it's a pain in the ass to change providers - anything that's at least partially trust and reputation based and where people order to lock in a choice and sit on it. Basically, they're liquidating built up customer goodwill.
    - nothercastle 1y ago
      Barrier to entry is high, is pretty capital intensive to setup a large enough childcare facility that takes appropriate advantage of child staffing minimums.
- deleted 1y ago
  [deleted]
- csa 1y ago
  > Is the theory here that the previous owners were altruistically pricing below what the market would bear? As someone who has done research on pricing in a range of sectors, it’s usually some form of ignorance rather than altruism. In case you think I’m just picking on child care providers, I will provide an additional example — non-VC SaaS services were often wildly mispriced/underpriced until the “charge more” mantra became more widespread (thank you, patio11).
fsckboy 1y ago
>o the 200k base SWE x 2 family can afford the 2x jacked up prices you are talking about housing in a high income area and of course those prices are going to be higher, it would start out shocking if they weren't, and quickly stabilize where we are now, as people loaded up their wagons and headed toward the landrush >It’s mostly catered towards those who can afford it all markets cater to those who can afford it. if not, prices go down, or up, to establish a new equilibrium.
- deleted 1y ago
  [deleted]
- pempem 1y ago
  "All markets cater to those who can afford it" I'm not sure this is true. PE driven markets currently seem to cater to the break point. What is the absolute most I can charge until someone will walk away? If I break it into a subscription, or into pieces will I be able to charge even more than that break point because the buyer has not or cannot easily do the math? Maybe offer financing and take a cut there as well. I am not making a moral argument, but it is far more sophisticated than "those who can afford it" and so, this is then not really about affording it, rather its about restructuring what the category should cost socially speaking and pushing that even further. This is happening in a large number of sectors at the same time.

blakesterz 1y ago

That was my first thought as well. I know PE is famously eating up Vets, I wonder if they've started on these too?

andrepd 1y ago
It's so great living in the ~best~ only system for organising the economy. Working people can't afford homes or starting a family, but at least we are generating amazing value for shareholders.
- orangecat 1y ago
  Working people can't afford homes Always amusing that this is the go-to argument against free markets, when the major cause of housing unaffordability is that governments prevent housing from being built.
  - csa 1y ago
    > Always amusing that this is the go-to argument against free markets, when the major cause of housing unaffordability is that governments prevent housing from being built. I’m not sure where you live, but in my little corner of California, this is not the major problem. The bottleneck is builders. There are requests from local government for affordable housing all the time, but builders earn more on the higher end stuff. The governments are starting to do workarounds by bundling high end developments with affordable housing, so I hope that works moving forward. Source: My buddy who is a general contractor. I don’t know how this works, but he has pointed out local examples to me.
    - ProfessorLayton 1y ago
      Builders may earn more making "higher end stuff" but the people who can afford those units can also afford the less expensive ones, pricing everyone else out. More housing, regardless if it's affordable or not helps keep prices in check. Dictating what builders can make, if they can at all, is a large reason housing prices have gotten out of hand.
    - kcb 1y ago
      So the response of the government is to add even more rules and limitations to building housing…
      - csa 1y ago
        > So the response of the government is to add even more rules and limitations to building housing… I mean… they are rules, but not limits. Low-income housing is being built. All of the locals I know consider it a win. Note that “low income” housing qualification here is about $60k for a single person (often retirees) and $120k+ for a family of four.
    - bombcar 1y ago
      Builders gonna build for most profit. Why wouldn’t they? But if they build tons, the older stock drops in value. Nobody is paying $500k for a 20 year old house if a brand new one is available for $500k next door.
      - csa 1y ago
        > But if they build tons, the older stock drops in value. Maybe I wasn’t clear. The local builders are at capacity. They literally can’t build any more. > Nobody is paying $500k for a 20 year old house if a brand new one is available for $500k next door. People are paying $700k for a 70 yo 750 sq ft house in a mediocre neighborhood, and $1m+ for a 50 yo 1000+ sq fr house. New houses start at $1.5m and quickly go up from there. Most of the new housing is not in the most desirable neighborhoods (there is no space to build new SFH housing in there), so the houses in the better, established neighborhoods are holding their prices. Note that the prices might be lower than the new houses (sometimes), but they are not going down. A result of this, using your example, is that there are rarely comparable old and new houses at similar prices.

orangecat 1y ago

They buy out all these established places and jack up the prices Is the theory here that the previous owners were altruistically pricing below what the market would bear?

joncrocks 1y ago
I think the theory is that they buy up a significant portion of the market, i.e. consolidate lots of independents. Then they raise prices in concert, and take advantage of reduced competition.
- em500 1y ago
  Wouldn't that create a good opportunity for people to start new pet cares, and undercut the presumably overprized PE-consolidated chains? Pet care doesn't seem to be highly regulated or have other high barriers to entry AFAIK.
  - BobaFloutist 1y ago
    PE seems to do well in industries where consumer choice has a good amount of inertia, where it's a pain in the ass to change providers - anything that's at least partially trust and reputation based and where people order to lock in a choice and sit on it. Basically, they're liquidating built up customer goodwill.
  - nothercastle 1y ago
    Barrier to entry is high, is pretty capital intensive to setup a large enough childcare facility that takes appropriate advantage of child staffing minimums.
deleted 1y ago
[deleted]
csa 1y ago
> Is the theory here that the previous owners were altruistically pricing below what the market would bear? As someone who has done research on pricing in a range of sectors, it’s usually some form of ignorance rather than altruism. In case you think I’m just picking on child care providers, I will provide an additional example — non-VC SaaS services were often wildly mispriced/underpriced until the “charge more” mantra became more widespread (thank you, patio11).

fsckboy 1y ago

>o the 200k base SWE x 2 family can afford the 2x jacked up prices you are talking about housing in a high income area and of course those prices are going to be higher, it would start out shocking if they weren't, and quickly stabilize where we are now, as people loaded up their wagons and headed toward the landrush >It’s mostly catered towards those who can afford it all markets cater to those who can afford it. if not, prices go down, or up, to establish a new equilibrium.

deleted 1y ago
[deleted]
pempem 1y ago
"All markets cater to those who can afford it" I'm not sure this is true. PE driven markets currently seem to cater to the break point. What is the absolute most I can charge until someone will walk away? If I break it into a subscription, or into pieces will I be able to charge even more than that break point because the buyer has not or cannot easily do the math? Maybe offer financing and take a cut there as well. I am not making a moral argument, but it is far more sophisticated than "those who can afford it" and so, this is then not really about affording it, rather its about restructuring what the category should cost socially speaking and pushing that even further. This is happening in a large number of sectors at the same time.