Comment by xvedejas
11 hours ago
Is there an actual issue? I've seen compelling arguments that places that banned the practice of algorithmic rent setting did not see any appreciable drop in rents. I'm almost convinced the problem is entirely supply side.
The problem is political, landlords run every level of government and use that power to artificially limit housing supply.
There's more housing than people. What's artificially limited is salaries. Higher salaries would mean massive benefits for workers and businesses. And catastrophe for non workers and real estate.
> There's more housing than people.
I don’t think this is really true. It’s naively true if you just look at the number of homeless people vs the number of empty units, but misses:
1. That markets need some portion of empty units for fluidity.
2. That many people aren’t homeless, but living in situations where they would take more housing if it was available. (Living with roommates, ex-partners, family, etc.)
3. Many places simply don’t have enough housing for everyone who wants to live there. If they did, people would move from other places.
I’m struggling to see how real estate would be catastrophically harmed by higher salaries. Could you help me see the line between those two points?
Naively, if I knew everyone’s salaries were about to double, I’d hope to be holding a fair amount of real estate going into that doubling.
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There is not more housing than people in places where people have the highest income. The median income of Sunnyvale is twice that in the US, but the median house is 5x more expensive there.
If housing supply is constrained, higher salaries simply mean people bid more on rentals and rents go higher.
The only answer is to build more housing and have a high property tax in unoccupied housing.
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Is allowing price-fixing and deniability (ans a service) across 100 mile regions a problem, while you yourself are highlighting a supply-side crisis?
Yes. That’s a problem.
There is no price fixing. They just enabled landlords to find out how high the market price actually was when they didn't know it before due to it being a very opaque market.
The market price is the price for which people are renting places based on market forces.
If the only market forces are landlords keeping half of their units empty so they can keep $1400 units priced at $2400 because that’s what the software (and indeed service) are pushing them to do, that’s price fixing.
There’s extra steps, it’s a new form, but the price is fixed, and the point of allowing housing to be built isn’t being fulfilled.
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If it's causally linked to higher prices, I agree. My question is whether we certainly know it's causally linked. In my mind right now it's similarly plausible that these things are just snake oil sold to landlords. There are a ton of conspiracy theories that would be a real problem, if true.
It's snake oil.
Landlords have an inherent trade off between holding out for a tenant who would pay a higher rent and not having the unit vacant in the meantime. Holding out for longer than that helps the other landlords at your expense. Meanwhile there are a large number of landlords, there is no way for the ones using a given system to force the others to do the same, and a significant percentage of them don't.
So if the system tells the landlords using it to do the thing that would increase rents if every landlord was using it, the "defectors" who don't use the system win out over anyone using it, which means using the system rather than defecting would cause you to lose money and everyone would have the incentive to defect.
Whereas if all the system is doing is suggesting the optimal point in the trade off between holding out for a higher paying tenant and renting the unit sooner, without assuming the other landlords are being required to use the same system, that's the same thing an individual landlord would do if they're not colluding.
The actual way landlords collude is through zoning boards, because then they have an enforcement mechanism, i.e. if someone is trying to defect by adding new units to alleviate the limited supply then the other landlords can sic the government on them, having passed the various laws against constructing those units there.
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