123 replies
3d1h
Some quotes from the filing:
Discussing a different RealPage product, another landlord said: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing . . . .”
In fact, as RealPage’s Vice President of Revenue Management Advisory Services described, “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down”
Its executives are blunt: They want landlords to “avoid the race to the bottom in down markets.” Sometimes RealPage is even more direct, acknowledging that its software is aimed at “driving every possible opportunity to increase price”
The fact that providing people with housing is even seen as an "industry" is a big sign of what is wrong with the world right now.
It is essential to living a decent life.
It should not be a driver of lining the pockets of people who are already rich.
Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there.
If it's proven that landlords colluded to fix prices, that should be addressed. But the reality is, prices are only going up in a select few metros. And it's because lots of people want to live in those areas, which leads to rising demand which has not been satisfied by new housing construction. People desperately want to believe that there's a silver bullet that will bring prices down without actually addressing the mismatch between supply and demand.
Profits are fine, excessive profits at the cost of people who need housing are not. There is no silver bullet, but increasing supply along with strong regulation to protect renters is welcome vs them being cattle to be squeezed by for profit entities. Human rights are a thing, there is no right to profit.
Lots of profit to squeeze out with regulation, based on the evidence. The Vienna model is a proven model if for profit enterprises walk away from housing.
https://thehill.com/business/housing/4718252-large-apartment...
https://accountable.us/report-top-corporate-landlords-see-pr...
The phrase "protect renters" is often used as a dogwhistle for price controls. For example, rent control and affordable housing mandates that require a certain % of units to be rented at below market rates. Can you elaborate on what exactly you're referring to here?
This would be an unproductive use of time. It is very clear you are pro "no regulation" around housing (based on your thread comments, "just build more"), so a heated argument with the potential for the subthread to be detached by dang does none of us any good. I'm not here to change your belief system, and to attempt to do so would provide no meaningful impact to macro outcomes.
All I'm asking you to do is list the specific laws or regulation you're referring to here when you write about the need to "protect renters". I don't know if we agree or disagree, because you haven't actually stated what your beliefs are.
I definitely support regulations around housing: housind needs to be safe (fire exits, sprinklers, etc.). Landlords can't engage in deceptive practices, like putting up ads for one unit and giving the tenant a different one. Units should be promptly repaired. Landlords shouldn't discriminate on the basis of protected class. I could go on.
Dynamic price control of rents to prevent them from accelerating beyond what wages can support (existing tenants win vs potential new market entrants, them the breaks when supply is catching up to demand or cannot meet demand), tenant rights with strong local regulatory oversight, government incentives to encourage a diverse ecosystem of suppliers bringing new supply onto the market based on forecasted market demand (cost of capital, regulatory streamlining support, construction labor pipeline, etc), upzoning whenever possible to encourage density as much as reasonable.
Supplier diversity is needed to prevent use of market power to restrict new supply coming online to hold rents higher than they otherwise would be (strong evidence homebuilders are doing this current state, restricting supply to juice profitability). The rest should be self explanatory. As you said, there is no silver bullet; it is various policy measures working in concert to attempt to arrive at a desired outcome. I am not anti profits, I am anti "gouge the human for basic needs for profits."
TLDR Some profits? Okay. Too much profit? Not okay. People living in constant fear of not having a home? Not okay. Build, build, build.
(am a landlord myself, do not raise rents unless actual costs go up, reduce rents when needed by tenants, keep my profits reasonable [~%6-%10], usually no more than $100/month/door)
Okay, so I was right: "protect renters" was indeed referring to price controls. Price controls coupled with what sounds like blatantly nativist policy:
Can you elaborate on what you mean by "existing tenants win vs potential new market entrants"? Does this mean that landlords must rent at lower rates to someone who has lived in SF for some time, versus an immigrant that is willing to pay higher rents?
I think GP is pretty clearly implying more akin to Prop 13 but for renters (i.e. Prop 13 locks in increase in property taxes to 2% a year), this policy would do something similar for rent.
It benefits existing renters because new entrants (new renters) would have to pay market price, but existing renters might be behind market rent if market rents are increasing too quickly. Same way that Prop 13 works.
Dynamic in the sense that it's not fixed at 2% but tied to some sort of variable index (San Diego for example does CPI + 5% with a hard cap of 10% YoY increase I believe)
It's called rent control. That's literally describing the existing rent control policies in SF: rent is fixes save for an extremely minor increase around 2%. Allowing a fixed price increase is still a form of price controls.
I really want the previous comment to elaborate on this:
How many economics studies, from all schools of economic thought, across 100 years of research need to prove that price controls don't work before people start accepting that fact?
I mean dynamic price control works in most French cities. The exception is Paris, but they tried a static price control for no reason (also, non-market housing supply is diminishing, which is a bad thing. Capitals with 30 to 40% non-market housing are doing extremely well usually)
In practice what does this mean? If landlords raise rents beyond what people can pay... doesn't that mean they lose tenants? If they do not lose tenants, then by definition doesn't it mean they have not raised rents beyond what people can pay?
The issue that we have here - market rates controlled by RealPage. Since everyone uses RealPage, in terms of price for renters it's essentially the same as if every building was owned by the same company.
I'm appalled how long it took for this lawsuit to be filed. We knew about this price fixing for quite some time.
Apparently, RealPage only serves 10% of the rental market in San Francisco: https://jacobin.com/2024/08/realpage-software-housing-landlo...
RealPage doesn't have nearly enough market share to engage in price-fixing. If it tried, its units would stay vacant as other renters flock to the 90% of units that aren't using RealPage.
Sure, but what matters is what percentage of the apartments with vacancies RealPage controls. Many apartments don't turn over year-to-year, so that 10 percent might or might not be misleading.
strong regulation increases costs (see all the permits and surveys required in SF).
What are "excessive profits"? 10%? 15%? 25%?
Does this even mean anything? This could mean their vacancy rate decreased and thus their business is more profitable. I don't see the issue with companies reducing vacancies and providing more housing to more people.
I cannot say, but experts can, and suggest to legislators and regulators implementation details. To operate a business in a jurisdiction is a privilege, not an entitlement.
I'd love to see the data on this. Usually when you increase construction costs, via additional regulation, you're going to increase the price of rent/sale.
What expert thinks increasing costs will lower prices?
It's the other way around. Regulation around pricing forces housing providers to provide housing within a constrained cost model (land + materials + labor + cost of capital + permitting/AHJ requirements [regulation]). If they cannot meet the market (or choose not to, for whatever reason), public housing is an option, with muni bonds issued to finance construction. This removes the profit component, which a for profit enterprise needs, but public housing does not.
where does the public housing come from? WA and CA can't seem to figure out how to build public housing. In WA, the best I've seen is the gov buying hotels and having the hotel sit empty for years [0].
If regulations make it impossible to build housing and public housing has the same regulations, who is paying that bill? The existing residents via sales and property taxes?
you can google construction costs in sf. how does regulations reduce any of those numbers?
[0] - https://www.kiro7.com/news/local/king-county-taxpayers-payin...
Washington has at least done a better job than San Francisco. Seattle has built over twice (IIRC three) times as many homes per-capita than SF over the last decade, despite lower population. The fact that rent control is banned statewide has a big role to play there.
It's not "despite" lower population. The thing that drives the costs up isn't evil landlords or the dreaded "profit motive". It's just demand massively outstripping supply, and high wages.
The natural interest rate plus a bit.
If you can earn 25% percent in profits in the current environment then it is a clear indication of an inefficient market - a market that needs to be regulated in order to create efficiency (like in this case as with many other cases: remove monopolistic behavior).
While it is problematic if you can't derive profits from productive activities it is also problematic when entities derive unsustainable profits - also for the party deriving the profits.
If there is not a bit middle class to consume products, then there will not be be a market to supply products to.
Targeting profit rarely helps. The big players can afford the financial engineers to make the profits negligible from an accounting perspective. Likely funneled into growth. The small players cannot, so you put them in a situation where selling to a big player is rational. And the oligopoly grows.
The current economic environment definitely over indexes on very abstract metrics to steer, which is problematic.
I am also not proposing any formal system.
I am saying that it is quite easy to spot profits that are too high.
I am also saying that the governments role is to ensure efficient markets.
In this case it is suing RealPage.
It could also be making it easier to make housing in a specific area to counter under supply.
it is all regulation.
Do you feel the same way about food production? Should we ban food production for profit and make people starve until someone decides to work for free to produce enough food for everyone to eat once again?
Or how about cars? Let's ban profit on cars. That'll make them cheaper, right?
I support price regulation when called for. Your hyperbole is...not congruent with reality, considering the incredible agriculture subsidies provided and automobile tariffs.
https://www.theatlantic.com/ideas/archive/2024/08/economists...
https://www.ncsl.org/financial-services/price-gouging-state-...
https://www.whitehouse.gov/briefing-room/statements-releases...
From a paid Matt Stoller BIG (https://thebignewsletter.com/) piece on monopoly pricing:
Laws to crack down on this behavior has popular support, so I won't spend additional time defending the idea in this forum, as it is unnecessary.
https://blueprint2024.com/polling/inflation-poll-06-25/
https://blueprint2024.com/wp-content/uploads/2024/06/Screens...
The outrageous profiteering in food and groceries is not with the hyper-subsidized agriculture industry that grows food and raises livestock, but up the supply chain in the middle-men who buy this to process and package it (especially meatpacking). Consumers, farmers, and grocers would all be served if the monopolies that absorb massive food profits were busted.
Sounds like the real solution to this problem is the same solution to the housing market: Too many laws preventing new entrants, which prevents natural competition from lowering prices.
The problem is the needless and protectionist laws and regulations. If you want to see the effectiveness of monopoly regulation, look at California's PG&E vs Texas' deregulated electricity provider market. Californians are paying outrageous bills, meanwhile Texans have their choice of paying different electricity providers, and thus have much lower electric rates.
Excessive profits are actually the catalyst for competition. THe cycle of capitalism and free markets looks like this: earn excess profits -> people build more supply -> prices come down and excess profits dry up -> people stop building -> earn excess profits. When you fix the 'prices come down and excess profits dry up' all you get is people stop building.
That works in a well functioning, liquid market. If there are barriers to entry for new competitors (like regulatory hurdles, or zoning), this free-market theory falls flat on its face.
Not sure what "price controls" you're talking about, but the reason it's expensive to build in SF (which reduces the appeal for builders) is zoning, the byzantine planning process, the ability of local residents to effectively block or delay projects, and weaponized environmental review.
Building housing doesn't need to be an investment opportunity. In a better world, I'm sure there would be plenty of people who would be happy to build housing with only enough profit to pay employees a comfortable wage. These sorts of people don't have the ability to break into the industry, though.
Why is this viewed as a problem?
The people living in SF and it's surrounding areas clearly want things the way they are. Who are we to force them to build "affordable" housing just because we think it might be good?
"We", mostly being people who don't even live in SF...
Do the tax payers of SF not get a say in how their community is managed? Are we now advocating people have a "right" to live in SF despite it's cost or something? How does that work in reality, and most importantly, why?
It’s a problem when every town/municipality thinks like this, and then larger state- wide governments are faced with the dilemma of an angry voting population tired of high housing costs.
You can either get ahead of a state-wide solution and implement something where you have some control that works for your community, or you can do nothing and wait for the state government to begin to remove zoning from local control.
High rent costs are not something a town/municipality can solve. In a most ways, it's also something a state government cannot solve.
"High" rent is relative to the area, and rent is high across the entire country currently.
Lack of rental housing drives up rental prices. The lack of rental housing is largely due to unnaturally low interest rates. People qualified for oversized loans, and bought up the rental supply, converting them into homes instead.
Since cash was easy to acquire via loans, this resulted in an unprecedented period of time where housing prices were driven upwards with near-zero limiting factor. That was the market where people were overbidding asking-price by $50K+ without even seeing the house... that was/is a very unnatural market. This bidding process resulted in significantly overvalued homes, which made them inaccessible to lower-income people. So the rental market shrunk significantly, and housing prices went through the roof... then runaway inflation came knocking, making everything that much worse.
Which is to say, all of this is the creation of poor federal policy, and there isn't much your state or city can do about it.
No, rent is not high across the entire country. It's high in a select few metros, and fairly low everywhere else. Municipalities can't unilaterally reduce rents, but the can exacerbate the problem by disincentivizing housing through regulation and price controls.
True, just as people from Mexico don't have a right to live in the rich and nice USA, people from the sticks don't have a right to live in the rich and nice SF.
People from Mexico don't have a right to live in the USA, any more than people from the USA have a right to live in Mexico; and the people moving into SF and complaining have top 3% incomes.
Nobody has a "right" to live in SF. If you can afford SF, then nothing is stopping you.
You do have a right to live, but you do not have a right to live in a particular area.
[1] https://www.law.cornell.edu/wex/right#:~:text=A%20right%20is....
Zoning restrictions in just three cities (San Francisco, San Jose, and New York) are responsible for all of the United States' GDP being lower by double-digit percentage.
It is in the interest of the entire country that these regions be forced to allow maximum housing development, because it will raise incomes across the entire country.
We know why zoning density restrictions exist, because their birth place was across the bay in Berkeley, whose proponents loudly extolled its benefits in pushing out anyone who was not White. This was the original intent of getting a say in development: to prevent undesirable racial minorities from moving in next door.
San Francisco weaponized housing density restrictions to push black people out of Haight-Ashbury, and to this day, continues to fight any and all housing development that might reverse this grave injustice.
Found it: https://eml.berkeley.edu/~moretti/growth.pdf
If New York and the Bay Area alone relaxed their zoning, their GDP would be 33% higher, and US GDP would be 3.7% higher (as of 2009), and national average income would be $3,685 higher.
Policy restricting housing is indeed another factor impeding housing. The price controls I'm referring to are rent controls (which applies to ~70% of apartments in SF, and the threat of reintroducing rent controls looms) and affordable housing mandates. The affordable housing mandates require that a certain percentage of units are rented at set prices.
Again, if housing isn't an investment opportunity, then why would anyone build new housing? Sometimes people get together and build co-ops. But those are rare, and it's only available to people with a lot of capital on-hand. Plus, it runs the risk of the project going over-budget.
Lots of businesses make less than stock market index returns. You can be a builder that doesn't want to beat the S&P and still support your family doing it. Not everything has to be about massive accumulation of wealth or "growth at all costs". Plenty of people are OK doing a day's work for a day's creature comforts and leaving it at that.
Sure you can deliberately invest in a way that doesn't generate the best returns. You can be a philanthropist and build housing for free! But the vast majority of people are indeed looking to maximize returns.
price controls is rent control. SF. see also: NYC "you can raise rent by X% per year AT MOST, no more than that" if inflation / supply/demand is >X%, the landlord eats it. Thus landlording might be for some, more appealing elsewhere.
Cali also has prop 13 i.e. rent control on real estate taxes. So if I bought my house in 1955, I might pay $100/year in property tax, the guy who just bought a completely identical house next door this year might pay $15,000 a year in property tax. On basically the same house. How is that fair? kinda a boomer "I got mine" type mentality. Also part of the bay area real estate problem, in addition to zoning/byzantine planning, borken process - why would anyone want to move out?!? Moving out would mean +$15,000/year tax, every year. Just stay put.
Of note in Singapore there's not really the concept of "apartment building" business and it works fine (very dense NYC tier housing there). The reason why is the more "units" you own, taxes become progressively more brutal, an apartment building would be tax armageddon. So most rentals are a person who owns a few condo type units and rents them, few enough that taxes aren't bad. Most people aim for owning, and for owning there is a private sector but a public government sector that provides home at more reasonable prices with various perks and incentives. That's how to handle housing when you've got tons and tons of people and almost no land.
If price controls on housing exist in SF but not elsewhere, and this causes developers to not build there, then the issue is not that price controls exist in SF. The issue is that price controls do not exist elsewhere.
Set the same price controls across the entire nation, suddenly there is no disincentive to not build in any one area.
You appear to be making an incorrect assumption that there is some consistent amount of housing which will be built each year, and the question is only how to distribute it among different localities.
That's not the case. If you add the same price controls everywhere, then the same near-zero housing gets built everywhere.
Construction companies will shut down, they will not continue paying people to build housing at a loss.
You appear to be making an incorrect assumption that price controls must be so onerous that they will result in zero new housing being built.
You appear to be making an incorrect assumption that I said "zero new housing". I did not. I said near-zero.
In your comment you explicitly specified that the whole country should adopt the same price controls as SF.
SF's price controls are sufficiently onerous that nearly no new housing is built there.
I absolutely did not say this.
I said "Set the same price controls across the entire nation", which means one set of consistent price controls for the country, not the existing set of price controls that SF currently has.
Perhaps I should have worded it as "Set a consistent set of price controls across the entire nation".
That's fair. The wording of your comment (heavily, honestly) implies setting SF's policies nationwide, but rereading I can see how it can be read the other way.
You're correct, "Set a consistent set of price controls across the entire nation" is a much better wording.
I'm not trying to be snarky, I'm genuinely curious. Have you ever read the economics literature on price controls?
They have not... and unfortunately this viewpoint is shared by too many these days.
Removing the profit-motive from the equation does not magically net increased benefits for everyone. It's usually the opposite in reality... landlords end up doing the absolute bare minimum because sinking a bunch of money into renovating the bathrooms or kitchen will not yield increased rent under these proposed policies. Or people looking to invest in housing/apartments for rental income decide it's ROI is far too low to be worth the hassle and risks... so less housing is built.
This line of thinking looks at some minority of people living in slums, and assumes every rental owner is actually a slumlord. So, the solution is obviously to degrade the situation for everyone because some small minority of people have it rough...
I mean, did you read Diamond, McQuade, and Qian? Or newer studies? It should be the minimum to read before talking about rent control effect (with Autor, Palmer, and Pathak) because people tend to cite 'Friedman', who _never_ empirically worked on this subject. I mean, I understand liberals/Libertarians seems to love pure reason, but I hope people on this website are more scientifically minded. Experience is always better than models, no?
[edit] anyway, rent-control on market housing do not work, but limited non-market housing do apply downward market pressure, even when done poorly and unplanned (as shown by AP&P study)
Suddenly there's no incentive to build in all areas.
Set the price controls across the nation, and developers will redirect their money towards something other than residential real estate. It's frankly disappointing to see this faulty thinking on HN. Price controls fundamentally disrupt the feedback loop between supply and demand. If you limit the profit to be made on building housing, you're disincentivizing it from being built.
Imagine a county is in the middle of a famine, and the government in a few provinces set price controls on food. The famine worsens in those provinces. Is the problem helped by setting price controls nationwide?
Realpage is involved in a vicious loop, not a virtuous loop. Even in the Bay Area, corporate landlords jack up rent like 10% every year, whereas small landlords are happy to raise rent by 3%. That's the difference due to algorithmic collusion set and controlled by RealPage.
How are the corporate landlords able to rent their units if the small landlords are selling equal quality units for substantially less? Wouldn't everyone just rent from the small landlords while the corporate apartments stay vacant? This is the hole in the price-fixing argument: price-fixing only works when everyone is onboard, otherwise the parties not involved in price fixing will gobble up the market share.
I wouldn't be surprised if corporate-run apartments are more expensive. They're are usually renting much nicer buildings with amenities like air conditioning, parcel delivery rooms, gated parking, etc.
If there was enough supply, they absolutely would.
It sure sounds like you've never rented. This is, in the vast majority of cases, not reality.
Exactly: prices are rising because there isn't enough supply to satisfy demand.
I have, in fact, rented in San Francisco. I rented from a small landlord in a building that had no A/C, no package room, no parking. I had to fix my refrigerator and shower mixer myself because she barely spoke English. But it was a cheap apartment! I also rented from a corporate landlord. It had a lot of amenities like a gym, a package room, and parking. But I paid a lot more for that apartment.
Small landlords who didn't use RealPage didn't struggle with occupancy. Large ones "fired" renters and warehoused apartments, meeting debt obligations at occupancy rates even below 80%.
And most amenities are bullshit. They've taken ordinary, expected services and privatized them, externalizing the costs to residents for kickbacks, and made elective services like cable and internet mandatory through exclusive provider agreements to inflate revenue.
In aggregate, squeezing older properties subsidizes newer properties by equalizing returns. They're making just as much or more off of cheaper properties as newer "premium" ones.
Because there's a shortage of units overall. All units get rented; the corporate landlords just make more profit, and a lot of people are priced out of the market, including many existing residents.
To live in it.
You want to live in an apartment complex by yourself?
You’ll need a construction cooperative. IDK if those can compete with large construction companies due to the economy of scale. The construction cooperatives were a staple of late Soviet and post-Soviet Russia, but were essentially outlawed later to make way for large construction business and mortgages-backed construction.
I'm not against them, but they are not the right answer for everyone. They are great if you want to live in the same apartment for a few decades, but if you move they become tricky.
It's called cooperative. If I'd like to live in apartment complex, I'd post an ad like "Buy an apartment in a future complex for a low price of X! Move in in only 2 years!". (Cost to build Y, number of apartments Z, X = Y/Z).
And it's not something new. When price is lower than market, people do buy it.
What if I only want to live someplace for a couple years? Building a house that I want to live in for the next 40 years makes sense, but if you have no reason to think life will keep you in the one place for 40 years renting may be a better deal - let someone else take the risk of building a house and hoping someone comes to live in to.
No, but this doesn't change the fact that housing is a basic good like gasoline and insurance. Controls in those industries don't prevent companies from investing. Profit regulation doesn't mean no profit.
Because there are alternate places without those controls. If housing were treated like the essential good that it is, there wouldn't be any ROI havens, and developers would adapt (or die if they can't accept reducing the typical ROI, which averages around 15%)
There's plenty of demand, just not for the houses that are being built. (That's not to say there aren't specific cities where there is no supply). Based on most affordability standards, many can't afford the typical rent or mortgage. If those prices can't come down, or income can't go up, then new types of much cheaper housing must be built.
Gasoline isn't subject to price controls, though! They were in the past, and the results were disastrous. This is what price-controls on gasoline look like: https://www.federalreservehistory.org/-/media/images/essays/...
The way that the government influences gas prices is that they stockpile or release oil from the US strategic reserves. They don't regulate prices. They influence supply in order to influence prices. The analogy would be building public housing.
I'm not sure what you mean by treating housing like an "essential good". Most essential goods aren't subject to price controls. There aren't price controls on food, for example. Most countries that set price controls on food experience famines (or the price controls are widely ignored and the black market becomes the normal market).
You can be prosecuted for price gouging of essential goods.
"price gouging" is not the same as price-fixing. Price gouging refers to raising prices in response to natural disasters: https://www.cato.org/blog/anti-price-gouging-laws-entrench-s...
There's very specific, and very short-term windows in which prices cannot be raise excessively. It's not even remotely comparable to price controls on rents.
It's called 'dynamic price control' and is present in most cities in my country. My landlord cannot rise the rent at weird levels, which is based on the selling cost of the unit. Basically if her unit appreciate 5% yoy, she won't be able to rise the rent higher than 5% yoy.
So it's exactly the same thing as SF rent control, albeit with a higher allowable year-over-year increase. There's nothing "dynamic" about it, it's just textbook rent control.
This is not a binary situation. There are plenty of reasonable approaches that help limit abusive landlord behavior without damaging the prospect of profitable real estate development.
I wholeheartedly agree that landlords should not engage in abusive behavior: Landlords should not discriminate on the basis of protected class. They should keep units safe and up-to-code. They should not engage in deceptive practices like advertising one unit and selling a different one, or falsifying facts about the unit.
But where I'm not going to agree is the notion that setting rent above a certain threshold is "abusive landlord behavior". If a landlord is setting the rent too high, the consequence should be that the unit stays vacant. If someone is willing to pay that rent, then evidently the rent wasn't too high.
Except that there are significant switching costs. A person moving has to pay moving costs, might have to replace furniture that doesn't work for the new place, can affect your children's schools etc. This means the value of a unit to someone living there can often be significantly higher than the market rate.
This can led to situations where the most profitable move for landlords is to take advantage of the discrepancy to regularly raise the rent for existing renters by more than the market, in attempt to maximize profit. Sure they might have to deal with the hassle of finding a new tenant every couple of years when someone gets priced out, but if it leads overall to slightly higher profits it's the winning capitalist move.
The rentiers are ostensibly following the law, but the overall cost to the population and quality of life loss to renters can be significantly outsized compared to a sliver of additional profit for the rentiers. This is a great example of externalized costs in a free market and exactly where government should generally be attempting sensible regulation.
I agree with most of what you said, and do think supply is ultimately the fix, however, we also have to acknowledge the extreme inelasticity of demand for housing, and the massive shoe leather cost, both of which leave consumers at a massive disadvantage in price discovery.
How are consumers at a disadvantage in price discovery? Hop on Zillow, craiglist, FB marketplace, etc. set your filters and sort by price.
Price discovery as in the market converging on a price, not as in an individual seeing how much something would cost at present.
https://en.m.wikipedia.org/wiki/Price_discovery
Since the good has very inelastic demand, suppliers have an easier time influencing the market. Small changes in supply should cause big changes in price, in both directions. However, prices go higher much faster during high demand than they go lower during low demand.
So you would be ok with contractors who are building the houses (often as subcontractors) coordinating their prices for the work to maximize the cost to the developer?
Sounds like a union
There is a lot more to San Francisco's housing crisis than price controls: lengthy permitting processes, environmental reviews, NIMBY community outreach, etc.
San Francisco has always been a crooked city.. fleecing newbies is sport.. they have jokes and murals and parties around it and always have.. in the American era.. source: personal testimony by someone born and raised there around 1900
Like Manhattan? They've built a lot, and it's getting cheaper every year
Manhattan rents tanked during the pandemic, but rebounded pretty quickly after covid subsided. Supply and demand is such that prices may rise even if you build a lot of housing if there's even more people that want to live there. Big supply coupled with even bigger demand will still see prices rise.
You're missing that they didn't use this to build or expand housing, but to limit it. Just look at the occupancy rates.
They colluded with property management companies to capture 80% of existing multi-family dwellings and raised rents to inflate hard asset values of PE owned properties nationwide. Just because this is the closest that homeowners have had to a bailout in their lifetimes doesn't mean they didn't profit even more.
It was a scam.
we seem to accept this at face value, but there's lots of evidence that supply is not the only issue, or even the biggest. Example: in Toronto this year there's been over 220 large real estate projects go insolvent. There's clearly a limit on the demand side.
What troublesome phrasing. "Provide" implies people should get housing for free, and "decent" implies getting "decent" housing for free...
Well, so who is actually paying for it then? Magical handwavy "government" money? Everyone knows where government money comes from, right? Right?
Do we want more printed money and uncontrollable inflation? No? Oh so we should just steal this money from people who worked hard, because some others didn't?
Ah yes, the ol' "rich people bad" whipping horse. Despite the tens of millions of jobs created by "rich people" and the millions and millions of people who live in actually decent housing in exchange for market rates.
The fact that some people actually truly believe "free government housing" is going to be "decent" is absolutely tragic. Yes, let's doom millions to the "projects" because it makes us feel better knowing those darn rich people aren't making money!
If anyone wants a porthole view into what government housing looks like - take a look at the plethora of stories and pictures from our military barracks, across all branches. Mold, bugs, broken appliances, holes in walls, locks that don't work... and nobody cares despite the very vocal, highly visible complaints. There's a reason our service men and women scramble to off-base housing the moment they are allowed.
I'll totally accept you're speaking just in the context of the USA but...
Council houses are fairly highly regarded in the UK (i.e. the property, in terms of space, light, build quality. The estates/tenants, not so much...). They also have a track record of maintaining them far better than private/social landlords - I can personally attest to that.
It is the large homebuilder companies that build truly awful, "tragic" homes, cutting every single possible corner imaginable for an extra penny of profit.
Wikipedia indicates most of these Council Homes were built in the early 1900's - and are not modern construction. An additional average of a around 100 homes total were built per year from the 40's through 1980. So these don't appear to be helping a significant portion of the population.
Wikipedia also indicates in the 1970's the UK government dramatically and suddenly cut back on funding for these homes (among other things), which led to some very poor living conditions.
Your quality of life being dependent on the whims of politicians and budgets outside-your-control seems awful...
I note you don't link to your sources. You need better sources and/or better research skills. 100 per year is way off. Have you confused 100 with 100,000? I think even that is low
Yes the Conservatives stopped building council homes, mostly through neoliberal ideology that the government shouldn't provide housing. The private market houses are far worse quality
The number of new council house starts dropped in the 70s, before thatcher.
The trend continued into the 80s but blaming thatcher and neoliberalism is simplistic at best.
https://www.ons.gov.uk/peoplepopulationandcommunity/housing/...
Table 2A, housing starts by FY.
1970 185k. 110k in 1978/79 before thatcher’s landslide. By 1980 (so before the 1980 housing act came in) down to 58k.
The starts are what’s important as those are the ones impacted by new legislation and policy.
From your source, this is the number dwellings "Completed - Local Authorities" from 1979 to 1997:
89,630 (1979)
88,540
68,330
40,080
39,170
37,580
30,410
25,380
21,820
21,450
19,350
17,870
11,230
5,700
3,360
2,880
3,440
1,740
1,550 (1997)
You're going to claim the Conservatives of that era didn't stop building council houses?
Compare with the 18 year period before Thatcher:
119,350 (1961)
132,070
126,240
156,830
167,300
179,170
202,860
190,670
182,380
179,280
157,380
122,360
104,570
124,140
152,470
153,750
145,070
113,660 (1978)
I don't recognise this 58k. What is the exact cell of that number?
Starts are important, not completions, when looking at policy impact. I added local authority and housing associations together as they are basically the same concept.
Oh you moved the goalposts. Got it.
Council houses and housing associations are completely different. Have you ever lived in either? I have
Fine, just have local authority numbers then which halved from 175k in the decade before thatcher was elected, let alone had any chance to implement policy.
She didn’t reverse the trend, but she didn’t start it.
Modern housing is a direct development of the industrial revolution. In that sense it is an industry.
You could provide housing like undeveloped nations do, where large families live in cramped hovels without electricity or running water.
In the sense that someone should want an apartment with 2 bathrooms, a fireplace, and a pool - it's easier to treat housing overall as a consumer good.
...vs "providing" housing like developed nations in cramped shelters, in cars and on the street? FYI: multigenerational households are a cultural artifact, not an economic one. As one might assume, hovels without water or electricity don't break the bank, they aren't "provided" by anyone either. Yours is a false dichotomy, and is easily disproved by examples in other developed countries where shelter is considered a right.
I grew up in tenements in Romania. So I can tell you from experience that building the bare minimum shelter for the most amount of people is possible (if less enticing than you may think). But the idea that they were anything other than "industrial" housing as OP states is ridiculous.
Regardless of who pays for it, housing modern peoples is an industry.
"Hovel" is the opposite of industrial housing, etymologically, and evokes the images of ad-hoc slums rather than soviet-style brutalist blocks. Industrial housing is a step up from what OP described (no running water or electricity).
I will also note that the currently in-vogue 5-over-1s lean heavily towards "Industrial housing". Funny how diffent economic systems both with a captive market converged towards no-frills housing.
This is quite the straw man you've constructed.
You seem to be suggesting that either housing must be exploitatively expensive, or people must live in squalor.
You are strawmanning me. Nothing in my statement suggests that treating housing as a product means it has to be exploitatively expensive or given away for free. If anything, most industrial products are supposed to get cheaper over time.
And yet the cost of housing more or less always increases. Isn't that enough to suggest that there's something about this "industry" that doesn't quite make sense the way it's handled?
But it doesn't function like that.
Building the house isn't even the part that is the problem. It's land/space and how some people maintain monopolies on those.
A free market might make the materials and construction of a house cheaper. It address that space is limited and that most expensive space is often where there are more jobs.
Well, housing needs to mostly be handled by the private sector if we want high quality.
Government housing should absolutely exist, but only as a safety net as their management is incredibly inefficient.
Private housing isn’t the issue here: collusion is. Collusion should generally not be tolerated in a well regulated capitalist system.
there are massive and documented scandals at the US Federal level with the departments assigned to regulate and serve those markets (HUD etc).. an easy and relevant start is the Savings and Loan collapse of the 80s, directly on top of mortgage monies
I don’t disagree but not sure what point you’re trying to make here.
Problems with regulation are the expected consequence of living in the real world and not a model. They should be fixed and we can do better.
I just don’t see how any of this leads us to more regulation. More government control means less efficiency and likely MORE corruption.
I don't see why this is an important point: food is an industry and it's never been cheaper in human history than in developed capitalist countries with vibrant agribusiness.
True but, look up the price fixing that's been going on in big AG via AgriStats. Similar story as OP.
It being an industry is what allows people to live a decent life.
Just like farming being an industry allows you to sit at a desk all day instead of being out there foraging.
If this was a market for a less politically charged product than housing, would the quotes be as malicious? Like if this software was used to help people get the best price for their car or their stocks or collectibles?
I'm not sure I understand what politics have to do with this. Housing is essential. It's "politically charged" because of the lack of affordability. Part of that is due to lack of building and now, evidently, part of that is due to price-fixing.
But as evidence of price fixing, people claiming to get sellers the best possible price isn't a smoking gun in any other market - essential or not.
This isn't relevant. I'm don't want smoking guns, I want an economy where harming people isn't profitable.
If I invest in a stock and the stock goes down, nobody looks at my intentions and decides whether I should make money off it. It's my responsibility to understand what I'm investing in.
If I invest in harming consumers, nobody should look at my intentions and decide whether I should make money off it. It's my responsibility to understand what I'm investing in.
Even if RealPage didn't know what they were doing was harming renters, they should have known that. Knowing how your actions affect people is a prerequisite to running a business in any market, but especially in a market where people's basic needs are at stake.
Most markets have many people making that claim, though. Those people have to compete against each other. Their pricing is also optional, where RealPage was basically forcing landlords to use their prices.
RealPage’s big issue is market penetration, though. They control pricing for enough of the housing stock to artificially manipulate the cost of housing.
It’s one thing to promise to get clients a sale price on the far end of the bell curve. It’s another thing entirely to move the entire bell curve.
Yes. Price fixing can happen in any market where participants on one side of the market collude to set prices. It is mostly illegal in the US: https://en.wikipedia.org/wiki/Price_fixing#United_States
But again, these quotes aren't specific admissions of price collusion as they are just "getting the best price".
Yes they would be, or at least should be taken that way. Capitalism is supposedly best for everyone because competition between suppliers of a good or service drives prices down allowing the most people to afford those goods or services. The jerk talking about "avoiding a race to the bottom" is really saying "lets circumvent market forces to screw people out of money since we're too incompetent to provide actual value in the face of competition".
Well yeah? for most people housing isn't abstract.
The answer to this question does not matter.
I don't think Funko Pops and housing are comparable.
My concern with this is that it fundamentally undermines competition, which is a promise of the markets. Being more efficient means delivering products more cheaply than your competitors, which is good for the market. This sort of collusion completely undermines that and holds back innovation in the market.
How would real estate developers feel if construction companies / subcontractors had a similar product for pricing their labor? Or how would any company feel if employees worked together to set the price of their labor? That sounds kind of familiar, and doesn't sound like something most companies would be happy about.