The middle case is that we are paying 2.6% higher rent due to RealPage.
I don't think the aggressive piece is realistic. And if we break up RealPage I highly doubt we'll see an significant drop in rent prices.
An interesting analysis would be looking at vacancy rate across different cities over time. If we saw a large increase in cities with a high penetration of RealPage I'd be more inclined to believe it's having a significant impact.
In NYC I can tell you that the metropolitan area lost about 500,000 people since 2020, added ~20-30k housing units per year in that same time. The vacancy rate somehow dropped dramatically despite this and rents also rose dramatically. I've yet to see any good explanation for this, yet you'll still see people advocate for building more housing as the solution.
Simply using the rental vacancy rate as a proxy for supply and demand does not work, since there are lots of factors that can affect vacancies. One of then, as outlined in the article, is landlords keep units off the market to drive up prices.
The explanation is that there isn't enough housing to meet demand. That's it. Until there is, prices will keep going up even when building more units.
Landlords wouldn't be buying up a ton of units and renting them out at a profit if there was a glut of inventory, because it would be a terrible investment.
Or, accounting and tax law makes it less painful to keep units vacant than reprice them at lower rents.
Which is a thing we could change via something like Vancouver's vacancy tax.
Make it more in landlords' interest to reprice units lower, if the market has excess inventory.
The market will dictate lower prices if there's excess inventory. If landlords are hoarding units and keeping them empty instead of lowering rental prices, that indicates a lack of available inventory.
That's not how repricing works.
If a landlord is unable to rent a unit at a desired price, because the rental market has moved lower, then they have two options.
They can decrease the price.
Or they can not offer the unit for rent (or continue listing it at the higher price).
The second option's cost to landlords is largely defined by accounting/tax rules, in regards to how painful the vacancy will be to them.
Thus, vacancy can be made more or less painful by changing accounting/tax rules.
> The second option's cost to landlords is largely defined by accounting/tax rules
The cost is having empty properties, which require insurance, maintenance costs, property taxes, likely mortgages of their own to pay, all of which cost money and which are by far the biggest costs to letting things sit unused.
And the fact in this case is there simply isn’t all these mythical properties sitting unused; simply look at current housing and rental stats.
I'm not talking about repricing specifically? I'm talking about how differently the housing market would behave if there was enough housing to go around.
Landlords have a 3rd option: They can sell the unit, because their unit no longer commands high prices due to housing supply meeting demand, and their capital is best used elsewhere.
If they are underwater and cannot sell above break-even, their bank will eventually do it for them.
As a commercial property, both their loan and sale price are contingent on the rental price.
So again, a disincentive to ever decrease rent (and thus demonstrate the market is softer and therefore you property is worth less).
Versus claiming it still commands higher rent (and is temporarily unrented) and thus more valuable.
What you're saying is true because the market is severely distorted, and a very large part of that is due to zoning restrictions. Zoning restrictions are severely constraining supply, and enabling those with capital to hoard property as an investment vehicle, rather than use it to buy a basic necessity. This scarcity allows landlords to keep a property empty rather than sell or rent at a lower rate, which would not be possible if buyers/renters had ample choice.
Not all rental properties are bought using a commercial loan, many are simply conventional loans where the owner decided to rent out their property rather than sell it. At least in the US, properties purchased with conventional loans can be rented out after the owner has lived in them after a few years. No commercial loan required.
The tax/accounting schemes you mentioned earlier would simply distort the market further without addressing the root problem: There's not enough housing for people that want it. Relaxing zoning rules would allow more housing to be built, and if there was enough of it, it would cease to be an "investment" rather than what they were built to be in the first place: Homes.
As a concrete example, I live in the SFBAY which has an extreme housing shortage. Yet my house is built on an unnecessarily big lot (required via zoning) and any structure built on it cannot be more than 27 feet tall. These are the kinds of rules that are severely distorting the market. I can't build a fourplex on the lot if I wanted to even if I have the space for it, and the demand is there. My next best option is to rent it out for way more than I otherwise could if there was a bunch more housing (Selling isn't really an option either because my mortgage rate is lower than what I could get in a HYSA; I'm basically being paid to borrow an appreciating asset).
This meme has got to go: there is little if any evidence to suggest that markets are functioning either in the specific case of housing in high COL areas in the United States or frankly most times anyone trots out the Milton Friedman trope on HN.
Markets fail, they get captured, they get distorted by accounting treatments, they generate cartels. They get technologically disrupted by new forms of cartel pricing that blow past existing regulations(e.g. TFA).
Capitalism sounds dope, I hope I live to see it. But the idea that supply and demand in the Econ 101 formulation is anything to do with the lot of say a person renting a flat in 2024 is silly and borders on insulting.
Capitalism sounds dope, I hope I live to see it. But the idea that supply and demand in the Econ 101 formulation is anything to do with the lot of say a person renting a flat in 2024 is silly and borders on insulting.
It's really unclear to me why you think this is the case. The median cost of a house in the Chicagoland suburb I live in is north of $470k, and that's not because of technological disruption or cartel pricing, but rather because we've outlawed anything but single-family housing on lots, something we did deliberately back in 1923 and 1947 with the express purpose of preserving and increasing home values for people who lived there at the time and keeping Black families out.
"Markets" didn't "fail" or "get captured" and no hedge fund engineered this situation; people who lived here voted for this outcome.
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A lot of native New Yorkers live with a lot of family members or roommates, and these are the types of people who are most likely the move out. Meanwhile, the most likely people to move into New York are well paid young professionals who can afford more space.
Landlords are not keeping units off the market to drive up prices. There are no landlords who have the pricing power to make that work. There is no landlord that can keep 10% of his inventory off the market to drive up rental prices 11%.
There is, however, in any market a small number of big players, all politically connected, who will conspire against newcomers building new units. A couple years ago stories about that "historic laundromat" in SF were making the rounds, that is very typical.
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I think the biggest culprit behind rent inflation isn't companies like RealPage (evil as they may be), nor landlords, but homeowners. Who vote for laws that make housing harder to build.
It's the only rational thing to do to the next generation as our parents did to us. As a homeowner when you've already been forced to pay a tremendous premium to own a house, you are not going to want to have the value of that asset decrease.
Wrong, the only rational thing to do is divest from the U.S. So glad my job is laying people off in high CoL areas and hiring in developing countries that aren't afraid to build.
There is a housing shortage.
That's it.
Fix it by building more housing.
Nothing else is gonna do anything.
That, and people who were born this century have no idea about the immensity of housing inflation.
In 2007, a 1-BR apartment in Hanover, NH was USD 750. With official inflation at 3 % that would be now something like USD 1325. Good luck finding anything below USD 2250 these days. That's 7 %, more than double headline inflation.
It's a complete policy failure, also because housing is about the most unproductive kind of investment there is.
Even if you fix all the zoning and land supply problems, you still need to qualify this as building the right kind of housing. Building more large, expensive homes that are gobbled up by investors or people 'parking' money isn't going to help people that need cheap dwellings to actually live in.
I'm not saying you're not aware of this or that your statement doesn't include the possibility, but (housing) developers will follow the money, and that doesn't mean making small affordable homes when the profit margins on other types of dwelling are higher.
It's been demonstrated over and over again that building high end housing does have an impact on the prices of lower end stuff.
It is of course likely to have a greater impact to build lower cost stuff, but blocking a development because you don't like the sort of houses they want to build is more or less stupid (it's not like a developer is going to do a project there is no demand for, and that demand is probably already looking elsewhere near the proposed development...).
> Building more large, expensive homes that are gobbled up by investors or people 'parking' money isn't going to help people that need cheap dwellings to actually live in.
Investors that gobbled up properties are renting them to renters (assuming it isn't on airbnb) to pay their holding costs (mortgage, tax, maintenance), since they are by definition investors. They actually increase the pool of property for renters, keeping rent price lower, which fights rental inflation. This does drive up purchase price for the home itself, but that's a separate topic.
Same with people parking money, why would they be leaving the homes empty when they could rent it out for additional cash flow?
That's the theory, and the practice is that there's a serious undersupply of entry-level housing. There's simply not enough housing of type 3 BR, up to 1500 sqft being built, and the existing stock is deteriorating.
People will say, yabbut, airplane hangar houses out on the bajada, but you cannot subdivide those monstrosities into apartments.
If zoning was fixed as GP was saying, then more housing people want would get built rather than what pencils out best for developers.
Zoning issues like low height limits, and high parking requirements etc. contribute to the shortage by making it infeasible build a lot of 3BR/1500sqft units because returns are better by building 2 smaller units in the same footprint, and because there's a shortage of housing, they'll be able to sell less than optimal units to people that need them.
Can there be enough entry-level housing? Parcels of land near me are like $200k and I'm not in a swanky suburb... ? Every new house built out in the hinterlands (1hr+ from MPLS) is like $600k. I'm in MN which is considered affordable.
Maybe there should be an occupancy credit, like a clean energy credit. Empty property holders can buy it from occupied property holders to compensate for the higher property tax burden.
That’s not how it works. New housing, even if luxury, provides options for wealthier people to buy who otherwise are forced to bid up the price of older homes and remodel it to their liking. New housing starts an immediate chain reaction where wealthier people vacate older housing in less desired areas for the new homes, thus putting downward price pressure on older homes. Our current problem is that for the last thirty years we have banned most new construction, resulting in a shortage of new homes.
We saw this dynamic play out during the pandemic when news cars were delayed due to supply chain constraints, and the price of used cars shot up.
I should have prefixed my comment by saying I'm not in America. In the country I live in, population growth effectively occurs by immigration of not-poor migrants, and that growth continues to outstrip supply. Sure, if you build more high-end houses than you need, you would see the effect you describe, but it's like emptying a swimming pool with a straw.
I can’t speak to your unspecified country, but in America the effect on lower income housing occurs within three years:
The only reason we don’t see more of this effect is because zoning restricts most new construction. The straw in your analogy is zoning.
> the cost of shelter accounts for 70% of all inflation for the last twelve months
Technically, this should read "70% of inflation in all items less food and energy". And since enrgy costs are actually down for the past year, this basically says that rent increases are the majority cause of inflation except maybe food, but that's not clear from the BLS data linked.
It's like there's a shortage of housing or something.
That's true in some markets, but the DOJ complaint highlights some places, like Atlanta, where vacancy rates have gone up, but rents have still climbed higher.
Why would you need to collude for higher rents with RealPage if a shortage of housing was the primary driver of rent increases?
If someone's being that greedy, they can't really use supply and demand to say their hands were tied in terms of controlling rent.
If you have the option to extract rents by forming a cartel (without legal punishment), you'll do it regardless of the underlying value of the asset you're trying to control because it's free money (assuming you can trust the other members of the cartel)
Rent is 36.1% of the CPI basket - so if inflation was distributed evenly - you'd expect 36.1% of the increase to come from rent / housing.
70% is really not that shocking. Rents only need to increase a little bit more than average with most other things increasing a little bit less than average to end up at 70%.
Vehicles and energy make up almost 14% of the basket - and those are negative.
The problem I have with this analysis is that it's tying RealPage to the politicized perception of rent inflation --- i.e., when the news cycles about it began. But affordability has been a crisis for something approaching a decade now, far precedes RealPage, and impacts places RealPage doesn't operate.
There's a subtext in this article that you have to follow Stoller to know about, which is whether he's aligning himself with the NIMBY opposition to the YIMBY movement, so I expect him to take some flak for these arguments, whether or not RealPage is a proximate cause of higher rents (I have no reason to disbelieve him on that point; by all means burn it to the ground).
It’s not realpage causing inflation. Come on
Look, the first most important totally big thing is that at the beginning of covid governments around the world printed a boatload of cash and gave it out as furlough for waiters and nurses and construction workers. And that was a Good Thing. People could eat and pay rent. But that took a boatload of cash - US printed 10 trillion dollars - the UK a trillion. 27 European nations all did something similar - the Middle East. Noone knows how much but it’s tens of trillions - perhaps let’s say 50 trillion. With a T.
Then that money went to the landlords and the supermarkets and the. Went up to the supermarket shareholders and the owners of the office buildings and eventually the wealthy - those who can live without salary - they got almost all of it. And they have to spend that money on something - property, stocks, gold, land
It’s inflation because there is an extra fifty trillion floating around.
Real page is doing nothing amazing - collating price information and telling landlords “hey a flat like this is renting for 20% on the next street”. Well that’s because some part of that fifty trillion just got invested in a company that hired a guy who moved into the neighbourhood- it’s going to chnage the character of the neighbourhood and those who are unlucky get squeezed out the bottom and sleep in a park looking over the Golden Gate.
Look at any article in MMT. This is something we solve with 1. Taxation (equal tax treatments for capital gains etc) and 2. Sane social policies (education, health etc)
The DOJ is looking for a culprit who is breaking a system that otherwise would work - that’s the point of anti-cartel laws. Ut the system is broken - and it has a simple fix. Tax the rich - we did it for Russian Olivarchs, now spread the love
> Real page is doing nothing amazing - collating price information and telling landlords “hey a flat like this is renting for 20% on the next street”.
Not true and not what RealPage is being charged with.
What RealPage actually did was:
- Provide a suggested rent
- Set their default at "use suggested rent"
- Promise landlords that suggested rent would always increase
- Pressure landorders who rented under the suggested price
- Connect landlords, so they could talk about pricing
> - Pressure landorders who rented under the suggested price
How did RealPage do this? I'm OOTL.
>> The complaints showed that it’s more than just information sharing; RealPage has “pricing advisors” that monitor landlords and encourage them to accept suggested pricing, it works to get employees at landlord companies fired who try to move rents lower, and it even threatens to drop clients who don’t accept its high price recommendations.
My understanding of what's alleged: Landlords have incentive to join because they can collude with other landlords to get higher prices. If they don't participate in the price fixing, they lose access to the platform.
I have a really hard time believing these allegations because that would mean that they're actively trying to push away paying customers, which neither helps Realpage nor the alledged cartel. Everything I've read about this has been suspiciously vague. What it sounds like they're doing is punishing property managers from deviating from the pricing algorithm rather than the property companies themselves.
> actively trying to push away paying customers
This is making the assumption that there's pushback against their "advice". People are stupid, greedy, and corrupt. Realpage only needed to make promises, promises that it could only keep if most of their customers followed suit, to get most (the vast, vast majority) of their customers to follow suit.
Their customers aren't mom and pop landlords with a second property; THey're not even full-time landlords with a dozen units that pay the bills. They're giant property investment companies, They "only" own a quarter of the units between them, but that's enough to shift the needle. They're very heirarchical, and if the upper management says "Use this pricing model", they'll just fire you if you don't. There are no exceptions, there's no leeway; They have internal apps for building the contracts and their "property managers" literally can't go outside of them.
Yes, but so what. Modern city property rental
Markets are open transparent competitive markets.
The idea that NYC was full of landlords who never looked at a listings page, had no idea how much similar apartments were going for, and have suddenly been transformed into rapacious greed monsters by a few phone calls from RealPage sales team is ridiculous.
Assets have gone up like SpaceX rockets since Covid - gold, stocks and of course property. And the top end of the market has the wealthy beneficiaries of that renting this nicest stuff, so the people who used to be there now move one rung down and price out that rung who move down and …
This is just a facet of systemic inflation - it’s not the actions of evil RealPage causing it. Sure they aren’t helping and may have broken laws - but FFS if market price information provision is now collusion Reuters and Bloomberg have got some lawyering up to do
There's a big difference between inefficient decentralized price fixing and efficient centralized price fixing, because once a centralized entity reaches critical penetration its pricing power increases drastically.
When there aren't enough defectors to move the market, they can be ignored.
> printed a boatload of cash and gave it out as furlough for waiters and nurses and construction workers … US printed 10 trillion dollars
Well, I don’t think 10 trillion was paid to waiters and nurses and construction workers, etc. I’m curious what that actual number was. I’d be surprised if it touched 1 trillion. Something like 250 billion sounds more plausible to me, but if anyone has a source that would be interesting.
10 trillion was added to the money supply, but I believe the vast majority of it went somewhere else and never passed through the sort of people you mention.
The money supply expansion did juice the stock market and avoided a recession on paper, while shifting real value from savers and earners over to asset holders. Working as intended, I suppose.
I think the biggest BS aspect of inflation is that wages are set in USD basically universally and are therefore subject to inflation.
You can choose to move your savings out of USD and into something more stable, but if you are a worker you can’t move your comp into anything else.
The second most BS part is being taxed on inflation whenever you sell assets. Even if the asset doesn’t have any real appreciation, you get to pay tax on whatever the government decided to inflate the currency by. Absolute nonsense.
I think we are in basic agreement
>>> while shifting real value from savers and earners over to asset holders. Working as intended, I suppose.
No furlough directly did not receive all of that but the “cost of covid” (the amount spent by government without taxing it back) was on that order. I wish I had a better line accounting of it.
But the basic effect is the same - the owners of assets - the wealthiest in society, get a greater proportion of the “tokens that allocate future resource allocation” (dollars) than previously - and this means they put that money somewhere - and we see that as inflation everywhere.
The solution as I see it is taxing the assets (not a “wealth tax” but more same approaches).
On taxing assets, I think money is used for too many different things.
If we are talking about people owning yachts or airplanes or fifth houses or whatever, then yes, tax the heck out of those.
However, assets with a dollar valuation are also how we assign control of economic functions, i.e. businesses. Control of an economic function is really, seriously qualitatively different than owning yachts or airplanes. Economic functions operating well or not so well has an enormous impact on the success or failure of a society.
Changing how we assign economic function control is very risky, since there is no way to simulate the outcome.
What do you think about that? Are you including share ownership in the asset tax? If so, do you think this will somehow not alter economic control?
An alternative might be to have a split currency that is not freely exchangeable, where one is for business control and one is for stuff. You can sell your business, hold the business currency for however long and then buy another business or part of a business. But if you want to convert the business currency to stuff currency, at that point you are taxed heavily.
I would be in favor of a separate currency class for land also, for the record.
(Not sure if this has some obvious fatal flaw, I am but an armchair economist.)
The basics are it is foolish to try and introduce a wealth tax - ie Bezos is worth 400Bn so we want 40bn now please. It becomes impossible to actually say how much a person owns - it fluctuates, even if they are co-operating fully it’s a fools game.
Yet tax rates are different for different categories - equalise those, and tax people at points of liquidation events - so capital gains is the most obvious.
Other liquidation events is borrowing against assets (the buy,borrow,die idea).
One can fairly easily imagine a minimum floor for all these - say 5 million in any fiscal year or whatever so we focus on where the money really is.
It’s also worth remembering that tax is simply a way of destroying the tokens of resource allocation (money). We want to tax the wealth to remove say X trillion globally. But remove it from the wealthiest who society has decided to give trillions to to handle covid but society thinks probably should not be having such a ratio of control over societies assets
And the implication is some other more destructive event can / will occur to rebalance - for example a massive stock market crash. The idea of “billions wiped off the exchange” is the same as a tax event - it’s just way more destructive and uncontrolled - event th wealthiest would rather t have tax planning than recessions and crashes
Never mind it's taboo to talk about how the pandemic made you wealthy. The divide is real, and I feel for the people who thought a $2000 stimulus check was a win. If only they knew about assets and broker margin.
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According to the IMF [1]. The world GDP in 2020 was about 85T. I really would question such a high estimation for the printed money to be anything near 50T or even something high to these levels.
Good stats on this are hard to come by. I am happy to see better figures and happy to wind down from 50T. But the order of magnitude is on the money - if it’s 10T or 30 does it really matter? It’s an unprecedented increase in such a short time - inflation figures have barely caught up - we will be seeing inflation go through the roof for decades to come and central banks trying to use their only lever (interest rates) on something that is a fiscal problem.
So follow my more restrained calculations: statia below gives us a 3TN increase for covid period, UK gov figures have 800BN Sterling which is 1T USD give or take. Then look at 27 European countries - at 500M people spending at the rate of USA gives us 5T, before we even look at Japan and Asia. We have got over 10TN. That’s a boatload in anyone’s momey
To my knowledge, this has only ever been done successfully during ww2. The mechanism used was semi-forced lending via war bonds. The war bonds were predominantly purchased by wealthy individuals and the rate of return was lower than all alternatives.
The spending of war debt on the other hand went out to common individuals. As the war debt was never repaid, encumbants would spend the next 2 decades with lower rates of return compared to new market participants.
> As the war debt was never repaid
The war debt was, in fact, repaid.
It's not making things better...
> This is something we solve with 1. Taxation (equal tax treatments for capital gains etc) and 2. Sane social policies (education, health etc)
Ah yup. First we print tens of trillions and go to unsustainable debt levels and then we explain that, now, we need to tax people.
Another solution would have been to maybe not print tens of trillions out of their arse?
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Also: Up to 30% of app pricing is due to price-fixing.
We (including the companies cannibalizing their own ecosystems for profit) would all be better off with a refresh of competition enhancing laws that (a) decrease barriers to entry & (b) apply increasing competitive restrictions as market share and absolute company size grow.
You could say the same about prices in general increasing due to credit card fees ($.30 per transaction + 3%).
I wonder if addressing price fixing in rent prices will ease the regulations around short-term rentals (which have shown to also increase rents by about 3%).
I wonder if we will ever reach a point where implementing a land value tax will be politically feasible. All other solutions look like bandaids to me.
> From 2020-2024, rent prices spiked by a third. How much of that is due to collusion by corporate landlords and a software coordinator?
> And where is the Fed?
Printing shitload of money. Which accounts for the other 75%.
There are very few jobs that provides as little value as being a landlord. Imagine all of them dying tomorrow, what happens? People just keep on living as usual, maybe they'll have to clean their own drain and paint their poorly maintained (ex)rental unit...
Its the upscale equivalent of ticket or GPU scalping (the practice of buying up all material and simply only upselling it for more money).
Parasites of the system.
The world has a lot of buildings. Buildings are valuable. Every building you see, unless it's been abandoned, is owned by someone or some entity that's responsible for acquiring, protecting, and maintaining it. Some do a better job than others.
Not that landlords do construction work themselves - that's a different industry. But someone has to arrange financing. Many renters are not trusted by banks enough to get a mortgage, often for good reasons. They still need a place to live, though.
Someone has to try to prevent people from damaging the buildings and repair them when they are damaged. Maybe that's the super, but someone has to hire them. The people who damage buildings are often pretty nasty.
In theory, the state could do this. In some countries, the state does a lot of it. But someone has to do it. It's an essential job, and if not a landlord, there will be a manager that does pretty much the same thing.
Just about everything can be outsourced, but it adds overhead. The labor doesn't go away, it just gets moved around.
Not everyone is ready and willing to be responsible for a building.
There's a good reason that "rent-seeking" is one of the biggest insults you can hurl at a business model.
Yes, because it's trying to make your business as legally necessary as a tax. It's to do with regulation, not renting things.
No, it's to do with being a useless middleman who extracts wealth without serving any productive economic purpose. Regulation isn't required in the slightest.
You can say similar things about shareholders or anyone else who allocates capital.
Calling landlords parasites is like blaming tech employees for gentrification. You're missing the bigger picture.
We gotta start with baby steps. You’re not gonna get people on board otherwise.
I tell you even worse group. Stock owners. Those people put some money to fancy ETF or investment fund. They do absolutely zero work and some how expect that money to appreciate or even give out dividends. While the poor workers of these companies get pittance or sub-standard wages with which they can barely afford nothing. And then those same companies exploit their customers while always pumping up the prices and extracting maximal margins...
Really if these people just died and the companies moved to their workers or customers what would change?
Landlords provide one thing capital. And capital expects returns. Maybe at times there is not enough competition in where capital is spend, but in general it is not that great place to put capital.
> Imagine all of them dying tomorrow, what happens?
The majority of landlords in the US (at least in the small scale - not sure about big complexes) do not own the property outright. They have a loan (e.g. mortgage) just like anyone else.
So what will happen? The banks will become the new owners. And they'll sell it at a discount to someone else (with a loan, of course).
I know it's easy to complain about landlords, but if you suddenly kill all landlords and ban landlording, you'll get a lot more homeless people.
I guess in this hypothetical, imagine all ownership of the rental units suddenly transferred to the tenant. Would the net effect to the economy be positive or negative?
The construction industry would collapse as buying confidence would disappear. Buildings with large amounts of renters would likely fall into disarray over the long term.
Are you saying that basically all co-ops are inept? I’m not saying they’re perfect but many do just fine.
Co-ops that are involved in building apartments? They're so few they're irrelevant. It still needs the members to put in a fair amount of money - likely a lot more than the average renter can afford. And it requires "decent" members.
Try being a landlord for the "median" renter, and you'll see how many irresponsible people are out there. A lot of below median folks have zero interest in maintaining their place - even if they own it. They'd make for very poor co-op members.
Seems like the same problem results: now what if you're a new renter? You can't live anywhere, because there's no landlords. Does somebody just give you a house, in this scenario, and if so, who?
In the short term, positive. But then their kids will grow up and no one is willing to invest in new housing.
Unless you want to live in government built housing.
I mean, you'd eliminate the rental market entirely, meaning that the only way to live anywhere is to buy.
That would be utterly disastrous. Homelessness would skyrocket. I mean, where are people who can't afford a down payment going to live?
Also, a lot of people don't want to buy, even if they can. If you know you're going to live in a city for a two-year employment contract before moving again, you want to rent.
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Although I agree with the sentiment, is there a quantifiable way to demonstrate this? For instance, do people who declare their occupation as landlord have some demonstrable income distribution x std deviations above some control group?
I'd imagine they do but I try hard to not just imagine data matches my priors. (Yes, this almost always makes me unpopular)
> For instance, do people who declare their occupation as landlord have some demonstrable income distribution x std deviations above some control group?
Not really. Being a landlord takes a bunch of money to sink into the real estate assets. If you don't put it in there you'd just leave it in a mutual fund or whatever and be making passive income of about the same order. Real Estate is a solid investment choice but it's not *that* much better.
Basically this argument is for the form "being a landlord looks like a working class job but pays better and that's not fair".
But the actual truth on the ground is "being a landlord is just a different way of being wealthy, and you have to fix plumbing on the side instead of working a day job in an office".
Sorry to press but do you have evidence?
Maybe the number of bankruptcies of landlords versus other professions normalized for age (since many bankruptcies are health related and landlords tend to be older).
Is there some hard data somewhere that can be scrutinized rather than narratives and sentiment?
(see I told you I'm unpopular)
So, you get to work a part time job while being richer than most working full time jobs. Not a bad gig, but it doesn't feel very fair to wage workers.
Well, sure, but "get to" is doing a lot of work in that sentence. It's just wealth. Your complaint isn't about the "gig", it's about the wealth. People can hold wealth in any of a zillion ways, most of which are invisible (c.f. Vanguard accounts, BTC, yada yada). Don't be upset with your landlord just because you can see their assets.
I mean to be really, truly Marxist about it, it's not the occupation of landlord but the rentier social relation that's problematic.
The theory is it extracts productive capital which could have a better multiplier effect allocated elsewhere such as education, research, public infrastructure, etc.
I'm sure there's some economic wonks that have long academic papers on this to support or refute this 170 or so year old idea, but I'm merely an amateur.
There was an economic movement after Henry George that very adamantly advocated for redoing this social relationship if you're curious. It was (most likely) the inspiration for the original version of Monopoly among other things. It might be regarded as a form of Economic Populism if you look at the adjacent beliefs of the prominent early 20th c. Georgists, but that'd probably be a 5,000+ word article.
I know landlords, and most of them earn less from landlording than the median engineer. They do, however, do a lot less work!
They can be parasites even without being richer.
Merely the fact that a typical landlord works far fewer hours than most other careers. Even a property portfolio of 100 properties probably isn't a full time job if you have managing agents.
This is nonsense. The vast majority of landlords have to work a day job in order to finance the property in the first place.
Sure but many groups of people work to service debt, such as the purchase of a house, education, medical expense or a small business loan. Demonstrating that landlords are not all of the leisure class is insufficient to imply they are equally living hard scrabble working lives compared to the population writ large.
the vast majority of landlords are small potatoes not worth talking about. understand that, when people talk about landlords, they're probably talking about the landlords of the vast majority of rentals.
In a rent-controlled area like in parts of Canada, it's not unusual for the tenant to improve the apartment they are renting with the consent of the landlord. This is ultimately to the tenants' benefit. Imagine investing $1200 into new flooring. Spread over 3/4 years of rent controlled rent, it comes out to $25 a month.
I think you're underestimating how many people can clean their own drain (well).
Which is its own solvable problem, but is a problem.
It's a problem whether the occupier is a renter or homeowner. The landlord is, in my experience, just going to call a handyman anyway. May as well cut out the middleman as thats something I can do myself.
Funny the same people that say stuff like this say that the person who can't even clean their own drain should plan their own retirement using a 401K as the vehicle and if they fail at it and starve well that's their fault, there's no way we could have seen it not working out.
The modern way is to have a handyman (just like you have a gardner or cleaner). The handyman has a list of gutters to empty, squeaky hinges to oil, HVAC filters to clean, etc.
Keep adding these small tasks to the list, and when the list gets long or something urgent comes up, call the handyman out for a half-day.
Who manages repairing an upkeep on the property if not the landlord?
The person living there, obviously.
I am a homeowner and I hate that part of my “job”.
I enjoy coding. I do not enjoy dealing with unreliable contractors and months of partially finished projects
I've seen way too many people wrecking the place they rent for that to be true.
Yes but if they had to fix the boiler themselves or they get no hot water - then they would, don't you think?
As if landlords clean the drains, provide a decent paint job.
Maybe in an apartment, a maintenance person might; but smaller rentals; at most the landlord charges the tenant and calls a plumber;
in reality the tenant is often responsible for calling and paying the plumber;
At worst, the landlord has never had the plumbing cleaned or inspected, the tenant or landlord hires a plumber, the plumber finds an object stuck at the tree roots in the pipe, and the landlord charges the tenant for the whole job, threatens the security deposit, and when the tenant refuses to pay, the landlord evicts them.
Move to a place with better tenant laws. Although I'd wager probably all states have the basic laws to protect tenants from what you're saying.
That seems like an easy, reflexive way to ride current wave of discontent over housing prices. I am not suggesting that landlords are not entirely blameless in the equation, but suggesting they add no value at all is shortsighted.
Not to mention the obvious, the new owner would become the new landlord and the process would start all over.
I have to tell you though. This weird attitude makes me hesitate on my next move. My family unit was discussing keeping current house ( and likely rent ) and moving into something further away. I will admit that this anti-landlord sentiment makes consider just straight sale to the highest bidder.
Like.. I have a married friend, whose dad is an actual landlord asshole ( and he was confronted over that ), but not everyone is an asshole despite what some recent actions by humans may suggest.
Say tomorrow we outlawed being a landlord. Every multi-family and apartment unit would be demolished and turned into SFH, or sold off as condos.
And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
Why wouldn't they just convert to owner-occupied apartments?
There's an argument to be made about affordability, but there are a lot of arguments against paying someone else, for which you receive no equity, and they get to keep any price appreciation of the property.
It'd be interesting to see a rental market that banned anything but rent-to-own contracts, where some portion of your monthly rent had to buy equity in the property you occupy. (With standardized terms for disposal, sale, etc)
Because most people can't afford to buy the apartment they are renting. Some huge percentage of US citizens can't scrape together enough money to pay for a car repair. How are they going to afford an apartment?
Doesn't that indicate we should be building more and cheaper housing?
The other components of the market aren't fixed and immutable.
If state governments wanted to mandate denser rezoning and smaller minimum unit sizes once unaffordability reached a certain level... they could.
Pointing at expensive housing and saying "We therefore have to make it cheaper by forcing more people into bargains in which they receive none of the gains" seems like the tail wagging the dog.
Sure, but it wouldn't change anything, unless your plan is to make housing so cheap that it literally costs less than a month of rent to buy the whole place, I don't think you're going to have a lot of luck.
The mentioned problem isn't that renters couldn't buy a property with a month's rent, but that they couldn't do so with reasonable savings.
Micro housing that's cheaper should certainly be able to meet that bar.
This is trivially false.
The sum of the rents of the tenants of the property is enough to cover the landlord's purchase of the building, any interest on any loan used to secure that purchase, hire upkeep for the building, and still have money left over for profit in the landlord's pocket.
Therefore, the sum of the rents of the tenants of the property is enough to cover the purchase of the building, which is a subset of those costs.
> The sum of the rents of the tenants of the property is enough to cover the landlord's purchase of the building, any interest on any loan used to secure that purchase, hire upkeep for the building, and still have money left over for profit in the landlord's pocket.
The "sum of the rents of the tenants" isn't relevant to a single tenant, the loan isn't used to "secure the purchase", and you're confusing cash flow for total equity.
A building owner puts down a deposit for some percentage (say, 20%) of the building's cost, gets 80% in debt, and pays down that debt over time with the cash flow from the tenants' rent payments. They make a small margin net of expenses, plus whatever equity accumulates over time.
Setting aside the (significant) question of whether or not a given tenant would have the credit necessary to do such a thing, a tenant is not necessarily able to do the same thing, just because they can afford to pay the rent.
You're missing the downpayment.
Real scenario: Someone buys a 4-plex for $1M. They put in $240K down payment. That's $60K per apartment. Will those tenants have that $60K they can put down to continue living there?
Sure, they'll own it and can get it back if they sell, but the majority of tenants don't have that kind of cash lying around.
I've always heard owner occupied apartments called condos. Is there a difference I'm not aware of?
You're paying the landlord for the cost of capital and the property management. And a 400k house in the stock market would on average generate 40k a year in appreciation. Most apartments in functional markets aren't anywhere near that appreciative.
> And a 400k house in the stock market would on average generate 40k a year in appreciation.
Only in your dreams. The massive value increase in the last decade is an extreme outlier. Schiller showed that in the long run, looking overall, the appreciation is only 1-1.5% above inflation.
Sure, some places do get big increases. But it's not the norm.
And some places get big downgrades. Look at Detroit for example. Or commercial real estate at this moment... Line does not always cost up so there is also risk involved.
Yeah, a system with implied equity from renting (something like 2-3% per year) would go a long way.
Switzerland also has an interesting system that seems designed to somewhat equalize renting vs. owning.
Why would they be demolished(a debit) when they could be sold(a credit)? 34% of people live in rental housing. If those units flooded the market, it'd be much easier to save up to buy while living with parents or friends.
If everyone's saving up to buy then the prices will go up. This is a demand problem, not a landlord problem. Too much demand vs supply makes prices go up. Far, far too much demand vs supply means landlords step in and invest, and divide properties into smaller pieces to rebalance supply to demand, or as much as is in each one's power.
It's really hard to get a mortgage for multiple people that aren't married.
Basically if you and 3 friends want to buy a 4-plex for 400k you would assume the bank would just make sure each person could afford 100k, they don't. Instead the bank will ensure each person individually has sufficient financial resources to afford a 400k home.
That and converting a 4 plex into condos doesn't make financial sense when you could just demolish it and build townhomes.
But 31% of rentals are SFRs. Surely that's enough to make an impact, no?
What would probably happen is following. It depends on many things, but assuming it is done near instantly and there aren't side effects.
For some time house values would drop, they will be sold to largest possible buyers. This isn't small buyers but probably banks, since they have lots of capital. Because of price drops, demand will be lessened and house construction industry will experience layoffs.
Many people will be without a house to rent, so banks or large money interests will offer their stockpile of houses under strict terms i.e. rent without renting (timeshare/leasing/house borrowing).
You'll get landlords but with deeper pockets.
> Say tomorrow we outlawed being a landlord. Every multi-family and apartment unit would be demolished and turned into SFH, or sold off as condos.
> And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
You are using a logical fallacy known as false dichotomy. We have many other possibilities such as commie blocks and even denser privately owned residential housing with fair competition and pricing. Maybe hard to achieve fair pricing but not impossible.
You'd have to outline how the current system isn't fair, or even what fair is.
would they be demolished? or would their prices drop to the point that the people paying the mortgage might be able to afford to actually own the equity?
The middle case is that we are paying 2.6% higher rent due to RealPage.
I don't think the aggressive piece is realistic. And if we break up RealPage I highly doubt we'll see an significant drop in rent prices.
An interesting analysis would be looking at vacancy rate across different cities over time. If we saw a large increase in cities with a high penetration of RealPage I'd be more inclined to believe it's having a significant impact.
For California and Text at least it looks like the price increase is classical supply and demand driven. We're not building enough multifamily or apartments. https://fred.stlouisfed.org/series/TXRVAC https://fred.stlouisfed.org/series/CARVAC
In NYC I can tell you that the metropolitan area lost about 500,000 people since 2020, added ~20-30k housing units per year in that same time. The vacancy rate somehow dropped dramatically despite this and rents also rose dramatically. I've yet to see any good explanation for this, yet you'll still see people advocate for building more housing as the solution.
Simply using the rental vacancy rate as a proxy for supply and demand does not work, since there are lots of factors that can affect vacancies. One of then, as outlined in the article, is landlords keep units off the market to drive up prices.
The explanation is that there isn't enough housing to meet demand. That's it. Until there is, prices will keep going up even when building more units.
Landlords wouldn't be buying up a ton of units and renting them out at a profit if there was a glut of inventory, because it would be a terrible investment.
Or, accounting and tax law makes it less painful to keep units vacant than reprice them at lower rents.
Which is a thing we could change via something like Vancouver's vacancy tax.
Make it more in landlords' interest to reprice units lower, if the market has excess inventory.
The market will dictate lower prices if there's excess inventory. If landlords are hoarding units and keeping them empty instead of lowering rental prices, that indicates a lack of available inventory.
That's not how repricing works.
If a landlord is unable to rent a unit at a desired price, because the rental market has moved lower, then they have two options.
They can decrease the price.
Or they can not offer the unit for rent (or continue listing it at the higher price).
The second option's cost to landlords is largely defined by accounting/tax rules, in regards to how painful the vacancy will be to them.
Thus, vacancy can be made more or less painful by changing accounting/tax rules.
> The second option's cost to landlords is largely defined by accounting/tax rules
The cost is having empty properties, which require insurance, maintenance costs, property taxes, likely mortgages of their own to pay, all of which cost money and which are by far the biggest costs to letting things sit unused.
And the fact in this case is there simply isn’t all these mythical properties sitting unused; simply look at current housing and rental stats.
I'm not talking about repricing specifically? I'm talking about how differently the housing market would behave if there was enough housing to go around.
Landlords have a 3rd option: They can sell the unit, because their unit no longer commands high prices due to housing supply meeting demand, and their capital is best used elsewhere.
If they are underwater and cannot sell above break-even, their bank will eventually do it for them.
As a commercial property, both their loan and sale price are contingent on the rental price.
So again, a disincentive to ever decrease rent (and thus demonstrate the market is softer and therefore you property is worth less).
Versus claiming it still commands higher rent (and is temporarily unrented) and thus more valuable.
What you're saying is true because the market is severely distorted, and a very large part of that is due to zoning restrictions. Zoning restrictions are severely constraining supply, and enabling those with capital to hoard property as an investment vehicle, rather than use it to buy a basic necessity. This scarcity allows landlords to keep a property empty rather than sell or rent at a lower rate, which would not be possible if buyers/renters had ample choice.
Not all rental properties are bought using a commercial loan, many are simply conventional loans where the owner decided to rent out their property rather than sell it. At least in the US, properties purchased with conventional loans can be rented out after the owner has lived in them after a few years. No commercial loan required.
The tax/accounting schemes you mentioned earlier would simply distort the market further without addressing the root problem: There's not enough housing for people that want it. Relaxing zoning rules would allow more housing to be built, and if there was enough of it, it would cease to be an "investment" rather than what they were built to be in the first place: Homes.
As a concrete example, I live in the SFBAY which has an extreme housing shortage. Yet my house is built on an unnecessarily big lot (required via zoning) and any structure built on it cannot be more than 27 feet tall. These are the kinds of rules that are severely distorting the market. I can't build a fourplex on the lot if I wanted to even if I have the space for it, and the demand is there. My next best option is to rent it out for way more than I otherwise could if there was a bunch more housing (Selling isn't really an option either because my mortgage rate is lower than what I could get in a HYSA; I'm basically being paid to borrow an appreciating asset).
This meme has got to go: there is little if any evidence to suggest that markets are functioning either in the specific case of housing in high COL areas in the United States or frankly most times anyone trots out the Milton Friedman trope on HN.
Markets fail, they get captured, they get distorted by accounting treatments, they generate cartels. They get technologically disrupted by new forms of cartel pricing that blow past existing regulations(e.g. TFA).
Capitalism sounds dope, I hope I live to see it. But the idea that supply and demand in the Econ 101 formulation is anything to do with the lot of say a person renting a flat in 2024 is silly and borders on insulting.
Capitalism sounds dope, I hope I live to see it. But the idea that supply and demand in the Econ 101 formulation is anything to do with the lot of say a person renting a flat in 2024 is silly and borders on insulting.
It's really unclear to me why you think this is the case. The median cost of a house in the Chicagoland suburb I live in is north of $470k, and that's not because of technological disruption or cartel pricing, but rather because we've outlawed anything but single-family housing on lots, something we did deliberately back in 1923 and 1947 with the express purpose of preserving and increasing home values for people who lived there at the time and keeping Black families out.
"Markets" didn't "fail" or "get captured" and no hedge fund engineered this situation; people who lived here voted for this outcome.
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A lot of native New Yorkers live with a lot of family members or roommates, and these are the types of people who are most likely the move out. Meanwhile, the most likely people to move into New York are well paid young professionals who can afford more space.
Landlords are not keeping units off the market to drive up prices. There are no landlords who have the pricing power to make that work. There is no landlord that can keep 10% of his inventory off the market to drive up rental prices 11%.
There is, however, in any market a small number of big players, all politically connected, who will conspire against newcomers building new units. A couple years ago stories about that "historic laundromat" in SF were making the rounds, that is very typical.
I think the biggest culprit behind rent inflation isn't companies like RealPage (evil as they may be), nor landlords, but homeowners. Who vote for laws that make housing harder to build.
It's the only rational thing to do to the next generation as our parents did to us. As a homeowner when you've already been forced to pay a tremendous premium to own a house, you are not going to want to have the value of that asset decrease.
Wrong, the only rational thing to do is divest from the U.S. So glad my job is laying people off in high CoL areas and hiring in developing countries that aren't afraid to build.
There is a housing shortage.
That's it.
Fix it by building more housing.
Nothing else is gonna do anything.
That, and people who were born this century have no idea about the immensity of housing inflation.
In 2007, a 1-BR apartment in Hanover, NH was USD 750. With official inflation at 3 % that would be now something like USD 1325. Good luck finding anything below USD 2250 these days. That's 7 %, more than double headline inflation.
It's a complete policy failure, also because housing is about the most unproductive kind of investment there is.
Even if you fix all the zoning and land supply problems, you still need to qualify this as building the right kind of housing. Building more large, expensive homes that are gobbled up by investors or people 'parking' money isn't going to help people that need cheap dwellings to actually live in.
I'm not saying you're not aware of this or that your statement doesn't include the possibility, but (housing) developers will follow the money, and that doesn't mean making small affordable homes when the profit margins on other types of dwelling are higher.
It's been demonstrated over and over again that building high end housing does have an impact on the prices of lower end stuff.
It is of course likely to have a greater impact to build lower cost stuff, but blocking a development because you don't like the sort of houses they want to build is more or less stupid (it's not like a developer is going to do a project there is no demand for, and that demand is probably already looking elsewhere near the proposed development...).
> Building more large, expensive homes that are gobbled up by investors or people 'parking' money isn't going to help people that need cheap dwellings to actually live in.
Investors that gobbled up properties are renting them to renters (assuming it isn't on airbnb) to pay their holding costs (mortgage, tax, maintenance), since they are by definition investors. They actually increase the pool of property for renters, keeping rent price lower, which fights rental inflation. This does drive up purchase price for the home itself, but that's a separate topic.
Same with people parking money, why would they be leaving the homes empty when they could rent it out for additional cash flow?
That's the theory, and the practice is that there's a serious undersupply of entry-level housing. There's simply not enough housing of type 3 BR, up to 1500 sqft being built, and the existing stock is deteriorating.
People will say, yabbut, airplane hangar houses out on the bajada, but you cannot subdivide those monstrosities into apartments.
If zoning was fixed as GP was saying, then more housing people want would get built rather than what pencils out best for developers.
Zoning issues like low height limits, and high parking requirements etc. contribute to the shortage by making it infeasible build a lot of 3BR/1500sqft units because returns are better by building 2 smaller units in the same footprint, and because there's a shortage of housing, they'll be able to sell less than optimal units to people that need them.
Can there be enough entry-level housing? Parcels of land near me are like $200k and I'm not in a swanky suburb... ? Every new house built out in the hinterlands (1hr+ from MPLS) is like $600k. I'm in MN which is considered affordable.
Maybe there should be an occupancy credit, like a clean energy credit. Empty property holders can buy it from occupied property holders to compensate for the higher property tax burden.
That’s not how it works. New housing, even if luxury, provides options for wealthier people to buy who otherwise are forced to bid up the price of older homes and remodel it to their liking. New housing starts an immediate chain reaction where wealthier people vacate older housing in less desired areas for the new homes, thus putting downward price pressure on older homes. Our current problem is that for the last thirty years we have banned most new construction, resulting in a shortage of new homes.
We saw this dynamic play out during the pandemic when news cars were delayed due to supply chain constraints, and the price of used cars shot up.
I should have prefixed my comment by saying I'm not in America. In the country I live in, population growth effectively occurs by immigration of not-poor migrants, and that growth continues to outstrip supply. Sure, if you build more high-end houses than you need, you would see the effect you describe, but it's like emptying a swimming pool with a straw.
I can’t speak to your unspecified country, but in America the effect on lower income housing occurs within three years:
https://www.sciencedirect.com/science/article/abs/pii/S00941...
The only reason we don’t see more of this effect is because zoning restricts most new construction. The straw in your analogy is zoning.
> the cost of shelter accounts for 70% of all inflation for the last twelve months
Technically, this should read "70% of inflation in all items less food and energy". And since enrgy costs are actually down for the past year, this basically says that rent increases are the majority cause of inflation except maybe food, but that's not clear from the BLS data linked.
It's like there's a shortage of housing or something.
That's true in some markets, but the DOJ complaint highlights some places, like Atlanta, where vacancy rates have gone up, but rents have still climbed higher.
Why would you need to collude for higher rents with RealPage if a shortage of housing was the primary driver of rent increases?
If someone's being that greedy, they can't really use supply and demand to say their hands were tied in terms of controlling rent.
If you have the option to extract rents by forming a cartel (without legal punishment), you'll do it regardless of the underlying value of the asset you're trying to control because it's free money (assuming you can trust the other members of the cartel)
Rent is 36.1% of the CPI basket - so if inflation was distributed evenly - you'd expect 36.1% of the increase to come from rent / housing.
70% is really not that shocking. Rents only need to increase a little bit more than average with most other things increasing a little bit less than average to end up at 70%.
Vehicles and energy make up almost 14% of the basket - and those are negative.
The problem I have with this analysis is that it's tying RealPage to the politicized perception of rent inflation --- i.e., when the news cycles about it began. But affordability has been a crisis for something approaching a decade now, far precedes RealPage, and impacts places RealPage doesn't operate.
There's a subtext in this article that you have to follow Stoller to know about, which is whether he's aligning himself with the NIMBY opposition to the YIMBY movement, so I expect him to take some flak for these arguments, whether or not RealPage is a proximate cause of higher rents (I have no reason to disbelieve him on that point; by all means burn it to the ground).
It’s not realpage causing inflation. Come on
Look, the first most important totally big thing is that at the beginning of covid governments around the world printed a boatload of cash and gave it out as furlough for waiters and nurses and construction workers. And that was a Good Thing. People could eat and pay rent. But that took a boatload of cash - US printed 10 trillion dollars - the UK a trillion. 27 European nations all did something similar - the Middle East. Noone knows how much but it’s tens of trillions - perhaps let’s say 50 trillion. With a T.
Then that money went to the landlords and the supermarkets and the. Went up to the supermarket shareholders and the owners of the office buildings and eventually the wealthy - those who can live without salary - they got almost all of it. And they have to spend that money on something - property, stocks, gold, land
It’s inflation because there is an extra fifty trillion floating around.
Real page is doing nothing amazing - collating price information and telling landlords “hey a flat like this is renting for 20% on the next street”. Well that’s because some part of that fifty trillion just got invested in a company that hired a guy who moved into the neighbourhood- it’s going to chnage the character of the neighbourhood and those who are unlucky get squeezed out the bottom and sleep in a park looking over the Golden Gate.
Look at any article in MMT. This is something we solve with 1. Taxation (equal tax treatments for capital gains etc) and 2. Sane social policies (education, health etc)
The DOJ is looking for a culprit who is breaking a system that otherwise would work - that’s the point of anti-cartel laws. Ut the system is broken - and it has a simple fix. Tax the rich - we did it for Russian Olivarchs, now spread the love
> Real page is doing nothing amazing - collating price information and telling landlords “hey a flat like this is renting for 20% on the next street”.
Not true and not what RealPage is being charged with.
What RealPage actually did was:
> - Pressure landorders who rented under the suggested price
How did RealPage do this? I'm OOTL.
>> The complaints showed that it’s more than just information sharing; RealPage has “pricing advisors” that monitor landlords and encourage them to accept suggested pricing, it works to get employees at landlord companies fired who try to move rents lower, and it even threatens to drop clients who don’t accept its high price recommendations.
https://www.thebignewsletter.com/p/antitrust-enforcers-the-r...
My understanding of what's alleged: Landlords have incentive to join because they can collude with other landlords to get higher prices. If they don't participate in the price fixing, they lose access to the platform.
I have a really hard time believing these allegations because that would mean that they're actively trying to push away paying customers, which neither helps Realpage nor the alledged cartel. Everything I've read about this has been suspiciously vague. What it sounds like they're doing is punishing property managers from deviating from the pricing algorithm rather than the property companies themselves.
> actively trying to push away paying customers
This is making the assumption that there's pushback against their "advice". People are stupid, greedy, and corrupt. Realpage only needed to make promises, promises that it could only keep if most of their customers followed suit, to get most (the vast, vast majority) of their customers to follow suit.
Their customers aren't mom and pop landlords with a second property; THey're not even full-time landlords with a dozen units that pay the bills. They're giant property investment companies, They "only" own a quarter of the units between them, but that's enough to shift the needle. They're very heirarchical, and if the upper management says "Use this pricing model", they'll just fire you if you don't. There are no exceptions, there's no leeway; They have internal apps for building the contracts and their "property managers" literally can't go outside of them.
Yes, but so what. Modern city property rental Markets are open transparent competitive markets.
The idea that NYC was full of landlords who never looked at a listings page, had no idea how much similar apartments were going for, and have suddenly been transformed into rapacious greed monsters by a few phone calls from RealPage sales team is ridiculous.
Assets have gone up like SpaceX rockets since Covid - gold, stocks and of course property. And the top end of the market has the wealthy beneficiaries of that renting this nicest stuff, so the people who used to be there now move one rung down and price out that rung who move down and …
This is just a facet of systemic inflation - it’s not the actions of evil RealPage causing it. Sure they aren’t helping and may have broken laws - but FFS if market price information provision is now collusion Reuters and Bloomberg have got some lawyering up to do
There's a big difference between inefficient decentralized price fixing and efficient centralized price fixing, because once a centralized entity reaches critical penetration its pricing power increases drastically.
When there aren't enough defectors to move the market, they can be ignored.
> printed a boatload of cash and gave it out as furlough for waiters and nurses and construction workers … US printed 10 trillion dollars
Well, I don’t think 10 trillion was paid to waiters and nurses and construction workers, etc. I’m curious what that actual number was. I’d be surprised if it touched 1 trillion. Something like 250 billion sounds more plausible to me, but if anyone has a source that would be interesting.
10 trillion was added to the money supply, but I believe the vast majority of it went somewhere else and never passed through the sort of people you mention.
The money supply expansion did juice the stock market and avoided a recession on paper, while shifting real value from savers and earners over to asset holders. Working as intended, I suppose.
I think the biggest BS aspect of inflation is that wages are set in USD basically universally and are therefore subject to inflation.
You can choose to move your savings out of USD and into something more stable, but if you are a worker you can’t move your comp into anything else.
The second most BS part is being taxed on inflation whenever you sell assets. Even if the asset doesn’t have any real appreciation, you get to pay tax on whatever the government decided to inflate the currency by. Absolute nonsense.
I think we are in basic agreement
>>> while shifting real value from savers and earners over to asset holders. Working as intended, I suppose.
No furlough directly did not receive all of that but the “cost of covid” (the amount spent by government without taxing it back) was on that order. I wish I had a better line accounting of it.
But the basic effect is the same - the owners of assets - the wealthiest in society, get a greater proportion of the “tokens that allocate future resource allocation” (dollars) than previously - and this means they put that money somewhere - and we see that as inflation everywhere.
The solution as I see it is taxing the assets (not a “wealth tax” but more same approaches).
On taxing assets, I think money is used for too many different things.
If we are talking about people owning yachts or airplanes or fifth houses or whatever, then yes, tax the heck out of those.
However, assets with a dollar valuation are also how we assign control of economic functions, i.e. businesses. Control of an economic function is really, seriously qualitatively different than owning yachts or airplanes. Economic functions operating well or not so well has an enormous impact on the success or failure of a society.
Changing how we assign economic function control is very risky, since there is no way to simulate the outcome.
What do you think about that? Are you including share ownership in the asset tax? If so, do you think this will somehow not alter economic control?
An alternative might be to have a split currency that is not freely exchangeable, where one is for business control and one is for stuff. You can sell your business, hold the business currency for however long and then buy another business or part of a business. But if you want to convert the business currency to stuff currency, at that point you are taxed heavily.
I would be in favor of a separate currency class for land also, for the record.
(Not sure if this has some obvious fatal flaw, I am but an armchair economist.)
A good resource on this is UK campaigner Richard Murphy - http://www.taxresearch.org.uk/Blog/
The basics are it is foolish to try and introduce a wealth tax - ie Bezos is worth 400Bn so we want 40bn now please. It becomes impossible to actually say how much a person owns - it fluctuates, even if they are co-operating fully it’s a fools game.
Yet tax rates are different for different categories - equalise those, and tax people at points of liquidation events - so capital gains is the most obvious.
Other liquidation events is borrowing against assets (the buy,borrow,die idea).
One can fairly easily imagine a minimum floor for all these - say 5 million in any fiscal year or whatever so we focus on where the money really is.
It’s also worth remembering that tax is simply a way of destroying the tokens of resource allocation (money). We want to tax the wealth to remove say X trillion globally. But remove it from the wealthiest who society has decided to give trillions to to handle covid but society thinks probably should not be having such a ratio of control over societies assets
And the implication is some other more destructive event can / will occur to rebalance - for example a massive stock market crash. The idea of “billions wiped off the exchange” is the same as a tax event - it’s just way more destructive and uncontrolled - event th wealthiest would rather t have tax planning than recessions and crashes
Never mind it's taboo to talk about how the pandemic made you wealthy. The divide is real, and I feel for the people who thought a $2000 stimulus check was a win. If only they knew about assets and broker margin.
According to the IMF [1]. The world GDP in 2020 was about 85T. I really would question such a high estimation for the printed money to be anything near 50T or even something high to these levels.
[1] https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVE...
Good stats on this are hard to come by. I am happy to see better figures and happy to wind down from 50T. But the order of magnitude is on the money - if it’s 10T or 30 does it really matter? It’s an unprecedented increase in such a short time - inflation figures have barely caught up - we will be seeing inflation go through the roof for decades to come and central banks trying to use their only lever (interest rates) on something that is a fiscal problem.
So follow my more restrained calculations: statia below gives us a 3TN increase for covid period, UK gov figures have 800BN Sterling which is 1T USD give or take. Then look at 27 European countries - at 500M people spending at the rate of USA gives us 5T, before we even look at Japan and Asia. We have got over 10TN. That’s a boatload in anyone’s momey
US fed balance sheet increases by 3 TN 2020-24 https://www.statista.com/topics/6441/quantitative-easing-in-...
To my knowledge, this has only ever been done successfully during ww2. The mechanism used was semi-forced lending via war bonds. The war bonds were predominantly purchased by wealthy individuals and the rate of return was lower than all alternatives.
The spending of war debt on the other hand went out to common individuals. As the war debt was never repaid, encumbants would spend the next 2 decades with lower rates of return compared to new market participants.
> As the war debt was never repaid
The war debt was, in fact, repaid.
It's not making things better...
> This is something we solve with 1. Taxation (equal tax treatments for capital gains etc) and 2. Sane social policies (education, health etc)
Ah yup. First we print tens of trillions and go to unsustainable debt levels and then we explain that, now, we need to tax people.
Another solution would have been to maybe not print tens of trillions out of their arse?
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Also: Up to 30% of app pricing is due to price-fixing.
We (including the companies cannibalizing their own ecosystems for profit) would all be better off with a refresh of competition enhancing laws that (a) decrease barriers to entry & (b) apply increasing competitive restrictions as market share and absolute company size grow.
You could say the same about prices in general increasing due to credit card fees ($.30 per transaction + 3%).
I wonder if addressing price fixing in rent prices will ease the regulations around short-term rentals (which have shown to also increase rents by about 3%).
I wonder if we will ever reach a point where implementing a land value tax will be politically feasible. All other solutions look like bandaids to me.
> From 2020-2024, rent prices spiked by a third. How much of that is due to collusion by corporate landlords and a software coordinator?
> And where is the Fed?
Printing shitload of money. Which accounts for the other 75%.
There are very few jobs that provides as little value as being a landlord. Imagine all of them dying tomorrow, what happens? People just keep on living as usual, maybe they'll have to clean their own drain and paint their poorly maintained (ex)rental unit...
Its the upscale equivalent of ticket or GPU scalping (the practice of buying up all material and simply only upselling it for more money).
Parasites of the system.
The world has a lot of buildings. Buildings are valuable. Every building you see, unless it's been abandoned, is owned by someone or some entity that's responsible for acquiring, protecting, and maintaining it. Some do a better job than others.
Not that landlords do construction work themselves - that's a different industry. But someone has to arrange financing. Many renters are not trusted by banks enough to get a mortgage, often for good reasons. They still need a place to live, though.
Someone has to try to prevent people from damaging the buildings and repair them when they are damaged. Maybe that's the super, but someone has to hire them. The people who damage buildings are often pretty nasty.
In theory, the state could do this. In some countries, the state does a lot of it. But someone has to do it. It's an essential job, and if not a landlord, there will be a manager that does pretty much the same thing.
Just about everything can be outsourced, but it adds overhead. The labor doesn't go away, it just gets moved around.
Not everyone is ready and willing to be responsible for a building.
There's a good reason that "rent-seeking" is one of the biggest insults you can hurl at a business model.
Yes, because it's trying to make your business as legally necessary as a tax. It's to do with regulation, not renting things.
No, it's to do with being a useless middleman who extracts wealth without serving any productive economic purpose. Regulation isn't required in the slightest.
You can say similar things about shareholders or anyone else who allocates capital.
Calling landlords parasites is like blaming tech employees for gentrification. You're missing the bigger picture.
We gotta start with baby steps. You’re not gonna get people on board otherwise.
I tell you even worse group. Stock owners. Those people put some money to fancy ETF or investment fund. They do absolutely zero work and some how expect that money to appreciate or even give out dividends. While the poor workers of these companies get pittance or sub-standard wages with which they can barely afford nothing. And then those same companies exploit their customers while always pumping up the prices and extracting maximal margins...
Really if these people just died and the companies moved to their workers or customers what would change?
Landlords provide one thing capital. And capital expects returns. Maybe at times there is not enough competition in where capital is spend, but in general it is not that great place to put capital.
> Imagine all of them dying tomorrow, what happens?
The majority of landlords in the US (at least in the small scale - not sure about big complexes) do not own the property outright. They have a loan (e.g. mortgage) just like anyone else.
So what will happen? The banks will become the new owners. And they'll sell it at a discount to someone else (with a loan, of course).
I know it's easy to complain about landlords, but if you suddenly kill all landlords and ban landlording, you'll get a lot more homeless people.
I guess in this hypothetical, imagine all ownership of the rental units suddenly transferred to the tenant. Would the net effect to the economy be positive or negative?
The construction industry would collapse as buying confidence would disappear. Buildings with large amounts of renters would likely fall into disarray over the long term.
Are you saying that basically all co-ops are inept? I’m not saying they’re perfect but many do just fine.
Co-ops that are involved in building apartments? They're so few they're irrelevant. It still needs the members to put in a fair amount of money - likely a lot more than the average renter can afford. And it requires "decent" members.
Try being a landlord for the "median" renter, and you'll see how many irresponsible people are out there. A lot of below median folks have zero interest in maintaining their place - even if they own it. They'd make for very poor co-op members.
Seems like the same problem results: now what if you're a new renter? You can't live anywhere, because there's no landlords. Does somebody just give you a house, in this scenario, and if so, who?
In the short term, positive. But then their kids will grow up and no one is willing to invest in new housing.
Unless you want to live in government built housing.
I mean, you'd eliminate the rental market entirely, meaning that the only way to live anywhere is to buy.
That would be utterly disastrous. Homelessness would skyrocket. I mean, where are people who can't afford a down payment going to live?
Also, a lot of people don't want to buy, even if they can. If you know you're going to live in a city for a two-year employment contract before moving again, you want to rent.
Although I agree with the sentiment, is there a quantifiable way to demonstrate this? For instance, do people who declare their occupation as landlord have some demonstrable income distribution x std deviations above some control group?
I'd imagine they do but I try hard to not just imagine data matches my priors. (Yes, this almost always makes me unpopular)
> For instance, do people who declare their occupation as landlord have some demonstrable income distribution x std deviations above some control group?
Not really. Being a landlord takes a bunch of money to sink into the real estate assets. If you don't put it in there you'd just leave it in a mutual fund or whatever and be making passive income of about the same order. Real Estate is a solid investment choice but it's not *that* much better.
Basically this argument is for the form "being a landlord looks like a working class job but pays better and that's not fair".
But the actual truth on the ground is "being a landlord is just a different way of being wealthy, and you have to fix plumbing on the side instead of working a day job in an office".
Sorry to press but do you have evidence?
Maybe the number of bankruptcies of landlords versus other professions normalized for age (since many bankruptcies are health related and landlords tend to be older).
Is there some hard data somewhere that can be scrutinized rather than narratives and sentiment?
(see I told you I'm unpopular)
So, you get to work a part time job while being richer than most working full time jobs. Not a bad gig, but it doesn't feel very fair to wage workers.
Well, sure, but "get to" is doing a lot of work in that sentence. It's just wealth. Your complaint isn't about the "gig", it's about the wealth. People can hold wealth in any of a zillion ways, most of which are invisible (c.f. Vanguard accounts, BTC, yada yada). Don't be upset with your landlord just because you can see their assets.
I mean to be really, truly Marxist about it, it's not the occupation of landlord but the rentier social relation that's problematic.
The theory is it extracts productive capital which could have a better multiplier effect allocated elsewhere such as education, research, public infrastructure, etc.
I'm sure there's some economic wonks that have long academic papers on this to support or refute this 170 or so year old idea, but I'm merely an amateur.
There was an economic movement after Henry George that very adamantly advocated for redoing this social relationship if you're curious. It was (most likely) the inspiration for the original version of Monopoly among other things. It might be regarded as a form of Economic Populism if you look at the adjacent beliefs of the prominent early 20th c. Georgists, but that'd probably be a 5,000+ word article.
I know landlords, and most of them earn less from landlording than the median engineer. They do, however, do a lot less work!
They can be parasites even without being richer.
Merely the fact that a typical landlord works far fewer hours than most other careers. Even a property portfolio of 100 properties probably isn't a full time job if you have managing agents.
This is nonsense. The vast majority of landlords have to work a day job in order to finance the property in the first place.
Sure but many groups of people work to service debt, such as the purchase of a house, education, medical expense or a small business loan. Demonstrating that landlords are not all of the leisure class is insufficient to imply they are equally living hard scrabble working lives compared to the population writ large.
the vast majority of landlords are small potatoes not worth talking about. understand that, when people talk about landlords, they're probably talking about the landlords of the vast majority of rentals.
In a rent-controlled area like in parts of Canada, it's not unusual for the tenant to improve the apartment they are renting with the consent of the landlord. This is ultimately to the tenants' benefit. Imagine investing $1200 into new flooring. Spread over 3/4 years of rent controlled rent, it comes out to $25 a month.
I think you're underestimating how many people can clean their own drain (well).
Which is its own solvable problem, but is a problem.
It's a problem whether the occupier is a renter or homeowner. The landlord is, in my experience, just going to call a handyman anyway. May as well cut out the middleman as thats something I can do myself.
Funny the same people that say stuff like this say that the person who can't even clean their own drain should plan their own retirement using a 401K as the vehicle and if they fail at it and starve well that's their fault, there's no way we could have seen it not working out.
The modern way is to have a handyman (just like you have a gardner or cleaner). The handyman has a list of gutters to empty, squeaky hinges to oil, HVAC filters to clean, etc.
Keep adding these small tasks to the list, and when the list gets long or something urgent comes up, call the handyman out for a half-day.
Who manages repairing an upkeep on the property if not the landlord?
The person living there, obviously.
I am a homeowner and I hate that part of my “job”.
I enjoy coding. I do not enjoy dealing with unreliable contractors and months of partially finished projects
I've seen way too many people wrecking the place they rent for that to be true.
Yes but if they had to fix the boiler themselves or they get no hot water - then they would, don't you think?
As if landlords clean the drains, provide a decent paint job.
Maybe in an apartment, a maintenance person might; but smaller rentals; at most the landlord charges the tenant and calls a plumber;
in reality the tenant is often responsible for calling and paying the plumber;
At worst, the landlord has never had the plumbing cleaned or inspected, the tenant or landlord hires a plumber, the plumber finds an object stuck at the tree roots in the pipe, and the landlord charges the tenant for the whole job, threatens the security deposit, and when the tenant refuses to pay, the landlord evicts them.
Move to a place with better tenant laws. Although I'd wager probably all states have the basic laws to protect tenants from what you're saying.
That seems like an easy, reflexive way to ride current wave of discontent over housing prices. I am not suggesting that landlords are not entirely blameless in the equation, but suggesting they add no value at all is shortsighted.
Not to mention the obvious, the new owner would become the new landlord and the process would start all over.
I have to tell you though. This weird attitude makes me hesitate on my next move. My family unit was discussing keeping current house ( and likely rent ) and moving into something further away. I will admit that this anti-landlord sentiment makes consider just straight sale to the highest bidder.
Like.. I have a married friend, whose dad is an actual landlord asshole ( and he was confronted over that ), but not everyone is an asshole despite what some recent actions by humans may suggest.
Say tomorrow we outlawed being a landlord. Every multi-family and apartment unit would be demolished and turned into SFH, or sold off as condos.
And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
Why wouldn't they just convert to owner-occupied apartments?
There's an argument to be made about affordability, but there are a lot of arguments against paying someone else, for which you receive no equity, and they get to keep any price appreciation of the property.
It'd be interesting to see a rental market that banned anything but rent-to-own contracts, where some portion of your monthly rent had to buy equity in the property you occupy. (With standardized terms for disposal, sale, etc)
Because most people can't afford to buy the apartment they are renting. Some huge percentage of US citizens can't scrape together enough money to pay for a car repair. How are they going to afford an apartment?
Doesn't that indicate we should be building more and cheaper housing?
The other components of the market aren't fixed and immutable.
If state governments wanted to mandate denser rezoning and smaller minimum unit sizes once unaffordability reached a certain level... they could.
Pointing at expensive housing and saying "We therefore have to make it cheaper by forcing more people into bargains in which they receive none of the gains" seems like the tail wagging the dog.
Sure, but it wouldn't change anything, unless your plan is to make housing so cheap that it literally costs less than a month of rent to buy the whole place, I don't think you're going to have a lot of luck.
The mentioned problem isn't that renters couldn't buy a property with a month's rent, but that they couldn't do so with reasonable savings.
Micro housing that's cheaper should certainly be able to meet that bar.
This is trivially false. The sum of the rents of the tenants of the property is enough to cover the landlord's purchase of the building, any interest on any loan used to secure that purchase, hire upkeep for the building, and still have money left over for profit in the landlord's pocket.
Therefore, the sum of the rents of the tenants of the property is enough to cover the purchase of the building, which is a subset of those costs.
> The sum of the rents of the tenants of the property is enough to cover the landlord's purchase of the building, any interest on any loan used to secure that purchase, hire upkeep for the building, and still have money left over for profit in the landlord's pocket.
The "sum of the rents of the tenants" isn't relevant to a single tenant, the loan isn't used to "secure the purchase", and you're confusing cash flow for total equity.
A building owner puts down a deposit for some percentage (say, 20%) of the building's cost, gets 80% in debt, and pays down that debt over time with the cash flow from the tenants' rent payments. They make a small margin net of expenses, plus whatever equity accumulates over time.
Setting aside the (significant) question of whether or not a given tenant would have the credit necessary to do such a thing, a tenant is not necessarily able to do the same thing, just because they can afford to pay the rent.
You're missing the downpayment.
Real scenario: Someone buys a 4-plex for $1M. They put in $240K down payment. That's $60K per apartment. Will those tenants have that $60K they can put down to continue living there?
Sure, they'll own it and can get it back if they sell, but the majority of tenants don't have that kind of cash lying around.
I've always heard owner occupied apartments called condos. Is there a difference I'm not aware of?
You're paying the landlord for the cost of capital and the property management. And a 400k house in the stock market would on average generate 40k a year in appreciation. Most apartments in functional markets aren't anywhere near that appreciative.
> And a 400k house in the stock market would on average generate 40k a year in appreciation.
Only in your dreams. The massive value increase in the last decade is an extreme outlier. Schiller showed that in the long run, looking overall, the appreciation is only 1-1.5% above inflation.
Sure, some places do get big increases. But it's not the norm.
And some places get big downgrades. Look at Detroit for example. Or commercial real estate at this moment... Line does not always cost up so there is also risk involved.
Yeah, a system with implied equity from renting (something like 2-3% per year) would go a long way.
Switzerland also has an interesting system that seems designed to somewhat equalize renting vs. owning.
Why would they be demolished(a debit) when they could be sold(a credit)? 34% of people live in rental housing. If those units flooded the market, it'd be much easier to save up to buy while living with parents or friends.
If everyone's saving up to buy then the prices will go up. This is a demand problem, not a landlord problem. Too much demand vs supply makes prices go up. Far, far too much demand vs supply means landlords step in and invest, and divide properties into smaller pieces to rebalance supply to demand, or as much as is in each one's power.
It's really hard to get a mortgage for multiple people that aren't married.
Basically if you and 3 friends want to buy a 4-plex for 400k you would assume the bank would just make sure each person could afford 100k, they don't. Instead the bank will ensure each person individually has sufficient financial resources to afford a 400k home.
That and converting a 4 plex into condos doesn't make financial sense when you could just demolish it and build townhomes.
But 31% of rentals are SFRs. Surely that's enough to make an impact, no?
What would probably happen is following. It depends on many things, but assuming it is done near instantly and there aren't side effects.
For some time house values would drop, they will be sold to largest possible buyers. This isn't small buyers but probably banks, since they have lots of capital. Because of price drops, demand will be lessened and house construction industry will experience layoffs.
Many people will be without a house to rent, so banks or large money interests will offer their stockpile of houses under strict terms i.e. rent without renting (timeshare/leasing/house borrowing).
You'll get landlords but with deeper pockets.
> Say tomorrow we outlawed being a landlord. Every multi-family and apartment unit would be demolished and turned into SFH, or sold off as condos.
> And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
You are using a logical fallacy known as false dichotomy. We have many other possibilities such as commie blocks and even denser privately owned residential housing with fair competition and pricing. Maybe hard to achieve fair pricing but not impossible.
You'd have to outline how the current system isn't fair, or even what fair is.
would they be demolished? or would their prices drop to the point that the people paying the mortgage might be able to afford to actually own the equity?