Comment by DANmode
10 hours ago
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.
10 hours ago
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.
Math failure here. If you keep half your $1400 units off the market and get $2400 for the others you are losing $400 per unit. Also there is zero evidence any landlords were doing this.
3 replies →
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.
> So if the system tells the landlords using it to do the thing that would increase rents if every landlord was using it
This is precisely what happened. Quoting from my comment at the time (https://news.ycombinator.com/item?id=39579488) --
Subscribing to a pricing data service: legal.
Using data feed to guide pricing and set initial figures: legal.
Agreeing, either implicitly or explicitly, to let the pricing data feed set the price floor: collusion.
Leaving units unsold and refusing to lower the price despite insufficient demand: usually a bad business decision, possibly indicator of a market failure.
Leaving units unsold to maintain agreed-upon price floor despite insufficient demand: collusion, market manipulation. Congratulations, you are a cartel.
1 reply →
Homeowners are usually the ones who don’t want more building, not amorphous landlords who have very little control over zoning and permitting in a place like the Bay Area.