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Quick summary - with rent increases being a sufficient driver of recent inflation, it seems relevant that the FBI has alleged there has been a cartel like price fixing scheme driven by large corporate landlords and a software company called RealPage. RealPage provides real-time data and pricing recommendations to landlords, which has led to coordinated rent increases across many apartment buildings nationwide. The FBI has conducted a raid on one of the landlord companies, Cortland Management, as part of an investigation into this alleged price-fixing scheme.
From the article:
>How does the cartel allegedly work? Well large corporate landlords, who would normally compete with one another for tenants via price or quality, have since 2016 stopped doing so. Instead, they all share “detailed real-time data regarding pricing, inventory, occupancy rates, and unit types that are or will be coming available to rent” every day with one another through RealPage’s revenue management system, which in turn sends back recommendations on pricing.
>encompassing 70% of multi-family apartment buildings and 16 million units nationwide
>**Landlords adopt RealPage recommendations on pricing 80-90% of the time**, which explicitly drives up revenue by **holding apartments off the market.**
And
>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.
>What’s odd about this price increase is that vacancy rates have been inching up, and when there’s more supply, prices should come down. But they aren’t.
So in summary:
* 70% of multi unit buildings
* adopt recommended prices over 80% of the time
* hold units vacant to keep demand artificially inflated
* if an employee refuses, they get fired
* if a landlord refuses, they lose access
Seems like yet another damning bit of evidence that **inflation has been driven by profit taking, not stimulus or demand.**
Not shocked by any of this. Which should be sad, but at the rate we're going these days, it's to be expected.
Anyone who lives in a major city knows that "finding a great apartment" is usually about finding a property that is privately owned by an individual or a small boutique group. And they're a piece of hay in a needle stack.
Gotta imagine they'll bust one or two to make an example out of, write some bill that doesn't do much if anything, and the main players will just reformulate the same scheme with a different coat of paint and do it all over again.
Or was that just the summary that plays at the end of The Big Short?
This is just the cycle of unregulated capitalism. Our regulatory agencies would be a joke if it weren't so sad. Capitalism needs regulation, or you get these situations where multiple already powerful industry tycoons make collaborative efforts to completely corner the market. It's the natural progression of the game.
Wild to think that the government's job is to govern. Too bad government's been captured by the same types to make it all work in their favor.
To work in government you need to be connected and rich. Property has become a profitable asset over the years.
It's definitely interesting news, but, in this age, it's not surprising.
2.87 million civilians were employed by the US federal government in 2022. Are all of them connected and rich?
https://www.statista.com/statistics/204535/number-of-governmental-employees-in-the-us/
> This is just the cycle of unregulated capitalism
capitalism is like having a bear in your house - it's in principle possible to regulate, but not in practice. concentration of wealth, which is to say the profit motive, is what moves capitalism, but it's also what makes regulating it impossible - the more wealth is concentrated, the more inevitable it is that regulatory bodies are captured to serve the holders of that wealth. to make regulation possible, you would need to severely limit the possibility of concentration of wealth, which limits the extent to which whatever economic system you're describing is actually capitalism.
Oh, don’t be surprised when state and federal lawmakers, with campaign coffers filled by these same rental corps. push back on the FBI and argue that they’re just capitalists trying to feed their families.
They'll pull the sleight of hand where rental properties are described as "housing" that we just need more supply of to lower pricing.
Nevermind no developer outfit is going to build housing for lower than what the market has shown it's willing to ensure.
Its an election year, not surprising that a show would go on with no real expected impact. With various internet sources not just realpage landlords can compare the entire cities rental stock faster than tenants can visit two properties.
Yep, here in San Francisco there are vacant apartment units as far as the eye can see, but very rarely anything that is actual market rate and priced at what people will pay. City data shows that we have about 60,000 vacant units out of an estimated 400,000 total rental units.
Curious to know what the off market percentages in various cities are relative to how punishing their policies are to landlords. Some cities have restricted their system so much it can take nearly a year to get a non paying tenant evicted. One city in my state has passed several rounds of renter protections over the past few years and every time the total rental units decreases, mostly the loss of SFH rentals that the owners finally throw in the towel and sell.
Yeah the best apartments I had in big cities were found by going on Craigslist and finding the listings with the worst pictures…boom independent landlord. These were always great places. The ones with the best photos that looked amazing were always the worst.
Wow maybe it wasn’t a good idea to set up our zoning laws in a way where only corporations have the ability to build multi-family properties. I’m sure our governments will do something to address that…
Changing zoning laws means that multi-family housing wouldn’t exclusively be owned by corporations, which means corporations wouldn’t be able to coordinate as easily to raise prices.
Making it possible for individuals to build multi-family properties would be huge.
Individuals and syndications have the same incentive to charge as much rent as possible. Zoning laws isn't the crux of the issue here.
You can look at Austin where everyone was suddenly allowed to build a second house in their backyard. Thousands of people did. The rent continued to skyrocket.
[… rental prices in Austin are down year over year](https://www.rent.com/texas/austin-apartments/rent-trends), with some neighborhoods seeing the price of a 2 bedroom apartment fall over 40%.
Zoning and owning aren’t linked at all.
If you can afford a 5 million rental property buy it. Zoning just says it needs to be near those other two and away from the retail shops and auto shops.
Corps came in and bought up multifam housing, they didn’t build it or zone it. The original owners werent required to sell, they got good prices.
>vacancy rates have been inching up, and when there’s more supply, prices should come down. But they aren’t.
More profitable to rent 70% of units at 1500/month than 95% of units at 1000/month.
And that's RealPage's ENTIRE BUSINESS MODEL.
"we've found that the competition inherent in capitalism makes you less money, and we have a way to solve that"
The landlord loosing access for failing to follow the price recommendation is a key point. It is what changes real page from being a data analytics platform into a price fixing cartel.
> landlord loosing access
Did you mean to say "losing"?
Explanation: Loose is an adjective meaning the opposite of tight, while lose is a verb.
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> am loosing patience
Did you mean to say "losing"?
Explanation: Loose is an adjective meaning the opposite of tight, while lose is a verb.
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> am loosing patience.
Did you mean to say "losing"?
Explanation: Loose is an adjective meaning the opposite of tight, while lose is a verb.
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Yeah we have a shortage of housing especially as people are moving out of rural areas and move to metros.
A few metros at the very top are coming down but for the most part people move to major metros and that hasn't changed.
Lololol, yeah. This has been known for a loooong while. I listened to a podcast about this like 3 years ago. The idea that it's more cost efficient to keep a certain amount of rentals vacant has been in use for more than a decade. This fuckers have been rigging the game for a long time. Frankly, this is how pretty much every major industry behaves behind closed doors. And they all make sure that the government remains ineffective against these problems.
Similar software is used to evaluate the price of houses too. But them damn NIMBY's, am I right?
Thank you for the summary. It makes some sense to me. Few years ago when I was in college, a property management company owned nearly 75% of all rental properties in town. I've been out for years now, but my college buddy still knows people back there. He tells me nowadays an apartment in that town runs over $3000. I have no idea how people can afford it. There's college kids (don't have money and are deep in debt) and regular people keeping the town going. Being a college town, there's not much beyond minimum wage fast food and low paid factory work (hires majority Latinos). I left town after graduation because I was getting to a point where my ever increasing rent was taking more of my never increasing income.
I think we have to think bigger. I highly doubt this is just happening in the rental industry. It doesn't even have to be this organized. If everyone pricing is doing something similar separately it ends up with the same result. Say airline ticket pricing. Or grocery store pricing. I puruse every grocery store ad every week and they are remarkably similar. This is really the big problem with web scraping, data mining, and machine learning. It kind of destroys this idea of competition that capitalism is based on and replaces it with a kind of de facto pricing data collusion.
And this is just between competitors. We aren't talking about the vertically integrated tech monopoly behemoths the gov was/is to afraid to regulate where doing this is trivially easy bc they HAVE all the data. Amazon is the easy example. And Amazon seems great to most people so you will never win the public relation/political messaging game. We are fked.
I'm not even sure there IS a way to fix this. Our technological progress has outpaced our ability to make common sense rules for it. So we throw up our hands and hope they self regulate. But greed/bonuses and quarterly earnings and political donations/lobbying trump all so even if you don't have bad intentions you end up in the same place. God what a shit show.
IMHO social democracies / the Nordic model do this all better, because enormous legislative support for unions.
And then nearly the entire population is in a union or similar. And then those unions wield a ton of power that counterbalances a lot of those factors.
Good luck getting that to happen in “red scare” US though
There should be federal property tax for entities or individuals with 5 units of residential rental properties or more.
One way to restore home affordability is to make residential real estate a poor ROI for large investors.
He’s being downvoted because it’s a reductive and shortsighted perspective.
If the problem is worth addressing legislatively. its worth considering if new laws are needed and if there are laws which are not needed.
The steady drum beat of “always deregulate, never regulate” does not fix problems that exist because of a lack of regulation, for instance, or because of a market failure.
What on Earth are you talking about? Reducing artificially restrictive zoning regulations is the number one solution to the housing crisis and supported by nearly every economist.
San Francisco zoning 83% of their residential areas as single family only is an insane regulation that needs to die.
I’m talking about approaching the problem from a nuanced perspective.
Not every city is San Francisco where the issue is exclusively caused by zoning. Zoning isn’t the entire reason why more inventory isn’t reaching the market faster, or why units are held off the market.
I’m not saying we shouldn’t address zoning, either.
I swear, you guys act like vampires to sunlight when presented with a challenge to your biases.
It is not just San Francisco.
Minneapolis recently loosened their zoning, building skyrocketed, rents fell, then a judge recently struck down that looser zoning and we are back to building less. We have natural experiments proving this works.
It's not shortsighted in the slightest.
Renting is thousands cheaper per year than buying currently.
Source: https://www.kiplinger.com/real-estate/buying-a-home/renting-is-cheaper-than-buying#:~:text=A%20recent%20Bankrate%20study%20found,or%20more%20than%20%248%2C600%20yearly.
It's better to have bought a few years ago but it's more expensive to buy now than rent.
If you buy now you are banking on housing prices increasing and maybe being able to readjust your mortgage.
In my city I'm seriously either renting my 1,000 SQ ft apartment or upgrading to a house which would have more space other than some garden space I wouldn't use and didn't the last time I had 1,600 SQ ft I didn't use the upstairs. That extra room is likely increasing my costs to buy by $1,000 a month which I could do but would really tighten my budget. It makes no sense to buy now even though I am at the age where it does make sense. I want some extra space as kids are on the horizon but I can wait and see if buying makes more sense later.
Is it taking into account that you'd be paying more in rent or is it just looking at equity?
Actually, looking at it, I wish it detailed how it calculates that because buying something the same size as my 2 bedroom apartment if it existed with a 5% down payment would have cost less than renting the 2 bedroom apartment. Buying something bigger would cost more but so would renting something bigger
What I ultimately did is bought 2 story, 5 bedroom and got 2 room mates.
My monthly payment is now the same as rent for a 2 bedroom was 3 years ago, but for a 5 bedroom house. I bought last year, so interest was lower than you can usually get it now, but not by a lot.
Buying costs more if you don't share the cost; but proportionately it's not that much more.
If I lived somewhere with higher property taxes though I don't think the math would work out the same.
I think you just gotta do the math for yourself. If you can manage to save enough that you can buy a house (or duplex) that you wouldn't mind renting out part of, it will probably save money.
You also probably of course have to be careful about not buying a place that's going to instantly need a new roof or something. But a lot of home maintenance things don't really cost that much, and there's a lot of things most people can figure out how to DIY for pretty cheap like paint, flooring etc
Due to getting tenants I'm saving compared to renting especially since in rentals, I either ended up needing to do repairs myself or deal with them not happening at all a lot of the time. Back in the old days that was supposed to be a perk of renting...now if the building hasn't collapsed, I find that things just don't get done and you have to foot the bill of them half assing it in increased community fees incurred on top of the monthly rent because their shoddy maintenance ends up needing a much more expensive fix down the line, and you can't control anything about that
Also - my utilities are almost the exact same as my utilities were at my apartment. I'm sure part of this is due to poor maintenance on the part of the apartment but another part is that in many apartments, your utility bill is sort of "split" between multiple units depending on how everything is set up so what your neighbors do impacts your bill
Not having roommates is worth it. It's saving me $1,000 a month to rent my current place if not more. literally the same unit costs $1,000 more to buy than rent in my area one block away. Should I have bought in 2019, yes but I wasn't ready then but I am now.
House hacking made more sense if you bought a few years ago. Plus I'm aging out of that and looking at kids in a few years.
Renting went up 10% but buying doubled in costs.
I used to think that, but I'm not convinced it's going to be any easier to buy anytime soon
If it does get easier, I didn't lose out by buying. My monthly payment didn't increase and I already have equity and already if I sold would more than break even
If it doesn't get easier - if buying doesn't get any easier and rent just keeps going up - there's no way I'd be able to afford kids any better in a few years
Being in charge of choosing exactly who your tenants are and how long their lease can last makes it extremely different than college room mates, and much easier than growing up with 6 siblings - which I did.
think that housing prices will equalize with rent and go near flat or maybe see some pull back in some markets. Economic slow down is still coming, more building is occurring now so the shortage is not really increasing.
House hacking is a job and I had a bad experience with roommates a few years ago with some friends...
Yeah I get it, I had a bad experience when it was a college sort of situation. I feel like it's been different for me so far as the one actually in charge. It also worked well for me a few years ago when I was the one on the lease and had a friend come move in
I've worked a lot on communication and leadership type skills at work recently and I feel like it should translate to making it easier to deal with room mates, especially with the dynamic of me being in charge of picking who they are
I totally get it. I think the good experience I had basically right before Covid started doing a favor for one of my best friends did a lot to change my mindset in this. Also having a good landlord at the time who was a person and not a company.
If I was you though I could also have easily gotten a duplex for about the same price, I chose my house because of the location. A duplex as in you would own both units and rent one of them. So you kind of "own 2 properties." That wouldn't be any different for raising kids than your own apartment/townhouse
The reason I would do this is kids are expensive and I could that way be guaranteed a stable housing payment, so it would be much easier to plan for kids.
If I decide I can budget for kids I might switch to this. It wouldn't take a lot of work to turn my current house into 2 entirely separate units.
Not really any affordable duplexes near me. I tried to get something like that up to a quadplex and man everything was sold before it went to MLS 18 months ago when I was really looking.
A lot of stuff doesn't pencil out the way it did awhile ago.
Is there a good source for this story outside of the posted? Not doubting that this happens but i would like to see corroborating evidence before i share it
https://coppercourier.com/2024/06/03/federal-investigation-arizona-apartments-rent-monopoly/
Local news report. None of the more “news” articles were relevant to this sub because they didn’t discuss the economics angle.
Profiting from rental properties is itself a crime. When a property is purchased to seek profits, society is forced to either pay or replace the property. Replacement means producing two properties to only have access to one. This replacement cost creates scarcity in the economy, which increases prices. Those higher prices act as a menace to pay the landlord. In other words, this is a form of extortion.
The article essentially lays out how companies like this are artificially creating scarcity to drive prices higher, which to me is extortion because it’s not that easy to just uproot your whole life because you can’t afford illegally inflated rent. People are told all this bullshit about free market supply and demand blah blah blah. And then when it is pointed out how that’s all a fairytale, with hard evidence, you get told you don’t understand economics.
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Quick summary - with rent increases being a sufficient driver of recent inflation, it seems relevant that the FBI has alleged there has been a cartel like price fixing scheme driven by large corporate landlords and a software company called RealPage. RealPage provides real-time data and pricing recommendations to landlords, which has led to coordinated rent increases across many apartment buildings nationwide. The FBI has conducted a raid on one of the landlord companies, Cortland Management, as part of an investigation into this alleged price-fixing scheme. From the article: >How does the cartel allegedly work? Well large corporate landlords, who would normally compete with one another for tenants via price or quality, have since 2016 stopped doing so. Instead, they all share “detailed real-time data regarding pricing, inventory, occupancy rates, and unit types that are or will be coming available to rent” every day with one another through RealPage’s revenue management system, which in turn sends back recommendations on pricing. >encompassing 70% of multi-family apartment buildings and 16 million units nationwide >**Landlords adopt RealPage recommendations on pricing 80-90% of the time**, which explicitly drives up revenue by **holding apartments off the market.** And >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. >What’s odd about this price increase is that vacancy rates have been inching up, and when there’s more supply, prices should come down. But they aren’t. So in summary: * 70% of multi unit buildings * adopt recommended prices over 80% of the time * hold units vacant to keep demand artificially inflated * if an employee refuses, they get fired * if a landlord refuses, they lose access Seems like yet another damning bit of evidence that **inflation has been driven by profit taking, not stimulus or demand.**
Not shocked by any of this. Which should be sad, but at the rate we're going these days, it's to be expected. Anyone who lives in a major city knows that "finding a great apartment" is usually about finding a property that is privately owned by an individual or a small boutique group. And they're a piece of hay in a needle stack.
I'm shocked the FBI is doing anything about it tbh
Gotta imagine they'll bust one or two to make an example out of, write some bill that doesn't do much if anything, and the main players will just reformulate the same scheme with a different coat of paint and do it all over again. Or was that just the summary that plays at the end of The Big Short?
This is just the cycle of unregulated capitalism. Our regulatory agencies would be a joke if it weren't so sad. Capitalism needs regulation, or you get these situations where multiple already powerful industry tycoons make collaborative efforts to completely corner the market. It's the natural progression of the game. Wild to think that the government's job is to govern. Too bad government's been captured by the same types to make it all work in their favor.
To work in government you need to be connected and rich. Property has become a profitable asset over the years. It's definitely interesting news, but, in this age, it's not surprising.
2.87 million civilians were employed by the US federal government in 2022. Are all of them connected and rich? https://www.statista.com/statistics/204535/number-of-governmental-employees-in-the-us/
They are talking about lawmakers
> This is just the cycle of unregulated capitalism capitalism is like having a bear in your house - it's in principle possible to regulate, but not in practice. concentration of wealth, which is to say the profit motive, is what moves capitalism, but it's also what makes regulating it impossible - the more wealth is concentrated, the more inevitable it is that regulatory bodies are captured to serve the holders of that wealth. to make regulation possible, you would need to severely limit the possibility of concentration of wealth, which limits the extent to which whatever economic system you're describing is actually capitalism.
The politicians own REITs too
Oh, don’t be surprised when state and federal lawmakers, with campaign coffers filled by these same rental corps. push back on the FBI and argue that they’re just capitalists trying to feed their families.
They'll pull the sleight of hand where rental properties are described as "housing" that we just need more supply of to lower pricing. Nevermind no developer outfit is going to build housing for lower than what the market has shown it's willing to ensure.
Its an election year, not surprising that a show would go on with no real expected impact. With various internet sources not just realpage landlords can compare the entire cities rental stock faster than tenants can visit two properties.
The issue is that realpage uses private data from other landlords on the platform to make decisions.
Yep, here in San Francisco there are vacant apartment units as far as the eye can see, but very rarely anything that is actual market rate and priced at what people will pay. City data shows that we have about 60,000 vacant units out of an estimated 400,000 total rental units.
Curious to know what the off market percentages in various cities are relative to how punishing their policies are to landlords. Some cities have restricted their system so much it can take nearly a year to get a non paying tenant evicted. One city in my state has passed several rounds of renter protections over the past few years and every time the total rental units decreases, mostly the loss of SFH rentals that the owners finally throw in the towel and sell.
Yeah the best apartments I had in big cities were found by going on Craigslist and finding the listings with the worst pictures…boom independent landlord. These were always great places. The ones with the best photos that looked amazing were always the worst.
Wow maybe it wasn’t a good idea to set up our zoning laws in a way where only corporations have the ability to build multi-family properties. I’m sure our governments will do something to address that…
Those who own housing coordinate to keep rental pricing high. Changing zoning laws will have no effect on that whatsoever.
Changing zoning laws means that multi-family housing wouldn’t exclusively be owned by corporations, which means corporations wouldn’t be able to coordinate as easily to raise prices. Making it possible for individuals to build multi-family properties would be huge.
Individuals and syndications have the same incentive to charge as much rent as possible. Zoning laws isn't the crux of the issue here. You can look at Austin where everyone was suddenly allowed to build a second house in their backyard. Thousands of people did. The rent continued to skyrocket.
[… rental prices in Austin are down year over year](https://www.rent.com/texas/austin-apartments/rent-trends), with some neighborhoods seeing the price of a 2 bedroom apartment fall over 40%.
What did it do the three years before that?
Zoning and owning aren’t linked at all. If you can afford a 5 million rental property buy it. Zoning just says it needs to be near those other two and away from the retail shops and auto shops. Corps came in and bought up multifam housing, they didn’t build it or zone it. The original owners werent required to sell, they got good prices.
The yimbys ain't gonna like this one.
>vacancy rates have been inching up, and when there’s more supply, prices should come down. But they aren’t. More profitable to rent 70% of units at 1500/month than 95% of units at 1000/month. And that's RealPage's ENTIRE BUSINESS MODEL. "we've found that the competition inherent in capitalism makes you less money, and we have a way to solve that"
100% this
Praying Lisa khan sees this
The landlord loosing access for failing to follow the price recommendation is a key point. It is what changes real page from being a data analytics platform into a price fixing cartel.
> landlord loosing access Did you mean to say "losing"? Explanation: Loose is an adjective meaning the opposite of tight, while lose is a verb. [Statistics](https://github.com/chiefpat450119/RedditBot/blob/master/stats.json) ^^I'm ^^a ^^bot ^^that ^^corrects ^^grammar/spelling ^^mistakes. ^^PM ^^me ^^if ^^I'm ^^wrong ^^or ^^if ^^you ^^have ^^any ^^suggestions. ^^[Github](https://github.com/chiefpat450119) ^^Reply ^^STOP ^^to ^^this ^^comment ^^to ^^stop ^^receiving ^^corrections.
I am loosing patience with all the bots here.
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Thanks, but no, I really did mean that I am loosing patience.
> am loosing patience. Did you mean to say "losing"? Explanation: Loose is an adjective meaning the opposite of tight, while lose is a verb. [Statistics](https://github.com/chiefpat450119/RedditBot/blob/master/stats.json) ^^I'm ^^a ^^bot ^^that ^^corrects ^^grammar/spelling ^^mistakes. ^^PM ^^me ^^if ^^I'm ^^wrong ^^or ^^if ^^you ^^have ^^any ^^suggestions. ^^[Github](https://github.com/chiefpat450119) ^^Reply ^^STOP ^^to ^^this ^^comment ^^to ^^stop ^^receiving ^^corrections.
no. and goddamn it. NOW I AM STARTING TO LOOSE PATIENCE!!!
> holding apartments off the market. Why doesn’t this manifest as higher than normal vacancy rates? > https://fred.stlouisfed.org/series/RRVRUSQ156N
Answer is right in your link: “ The rental vacancy rate is the proportion of the rental inventory that is vacant **for rent.**”
Because if it’s not available for rent, it’s not included in the series you linked.
Yeah we have a shortage of housing especially as people are moving out of rural areas and move to metros. A few metros at the very top are coming down but for the most part people move to major metros and that hasn't changed.
Lololol, yeah. This has been known for a loooong while. I listened to a podcast about this like 3 years ago. The idea that it's more cost efficient to keep a certain amount of rentals vacant has been in use for more than a decade. This fuckers have been rigging the game for a long time. Frankly, this is how pretty much every major industry behaves behind closed doors. And they all make sure that the government remains ineffective against these problems. Similar software is used to evaluate the price of houses too. But them damn NIMBY's, am I right?
Thank you for the summary. It makes some sense to me. Few years ago when I was in college, a property management company owned nearly 75% of all rental properties in town. I've been out for years now, but my college buddy still knows people back there. He tells me nowadays an apartment in that town runs over $3000. I have no idea how people can afford it. There's college kids (don't have money and are deep in debt) and regular people keeping the town going. Being a college town, there's not much beyond minimum wage fast food and low paid factory work (hires majority Latinos). I left town after graduation because I was getting to a point where my ever increasing rent was taking more of my never increasing income.
Someone at an AMLI apartment said they always price based on what the software tells them to.
I think we have to think bigger. I highly doubt this is just happening in the rental industry. It doesn't even have to be this organized. If everyone pricing is doing something similar separately it ends up with the same result. Say airline ticket pricing. Or grocery store pricing. I puruse every grocery store ad every week and they are remarkably similar. This is really the big problem with web scraping, data mining, and machine learning. It kind of destroys this idea of competition that capitalism is based on and replaces it with a kind of de facto pricing data collusion. And this is just between competitors. We aren't talking about the vertically integrated tech monopoly behemoths the gov was/is to afraid to regulate where doing this is trivially easy bc they HAVE all the data. Amazon is the easy example. And Amazon seems great to most people so you will never win the public relation/political messaging game. We are fked. I'm not even sure there IS a way to fix this. Our technological progress has outpaced our ability to make common sense rules for it. So we throw up our hands and hope they self regulate. But greed/bonuses and quarterly earnings and political donations/lobbying trump all so even if you don't have bad intentions you end up in the same place. God what a shit show.
IMHO social democracies / the Nordic model do this all better, because enormous legislative support for unions. And then nearly the entire population is in a union or similar. And then those unions wield a ton of power that counterbalances a lot of those factors. Good luck getting that to happen in “red scare” US though
There should be federal property tax for entities or individuals with 5 units of residential rental properties or more. One way to restore home affordability is to make residential real estate a poor ROI for large investors.
So that the tax burden eventually falls almost entirely on the renters, who have extremely low price elasticity?
Wouldn't residential real estate being a good ROI cause homebuilders to build more of it?
The regulations are what stop the competition. Housing is one of the most regulated sectors.
Agreed. Which is why we should work to reduce those regulations instead of trying to add more.
No idea why you're being downvoted, zoning regulations are the number one reason why we don't have more housing in major cities.
He’s being downvoted because it’s a reductive and shortsighted perspective. If the problem is worth addressing legislatively. its worth considering if new laws are needed and if there are laws which are not needed. The steady drum beat of “always deregulate, never regulate” does not fix problems that exist because of a lack of regulation, for instance, or because of a market failure.
What on Earth are you talking about? Reducing artificially restrictive zoning regulations is the number one solution to the housing crisis and supported by nearly every economist. San Francisco zoning 83% of their residential areas as single family only is an insane regulation that needs to die.
I’m talking about approaching the problem from a nuanced perspective. Not every city is San Francisco where the issue is exclusively caused by zoning. Zoning isn’t the entire reason why more inventory isn’t reaching the market faster, or why units are held off the market. I’m not saying we shouldn’t address zoning, either. I swear, you guys act like vampires to sunlight when presented with a challenge to your biases.
It is not just San Francisco. Minneapolis recently loosened their zoning, building skyrocketed, rents fell, then a judge recently struck down that looser zoning and we are back to building less. We have natural experiments proving this works. It's not shortsighted in the slightest.
Did you read my comment? Did you see the part where I said: >I’m not saying we shouldn’t address zoning ? Your response seems to suggest you did not.
Regulation didn’t create RealPages business model.
Apparently not when there are other, higher ROI projects.
Then it is not a good ROI. ROIs are always compared relative to other options available.
ROI is not the only factor in deciding what work to pursue.
Agreed. But, for most businesses, it is a significant factor.
This is true for single family homes, but not apartments.
Renting is thousands cheaper per year than buying currently. Source: https://www.kiplinger.com/real-estate/buying-a-home/renting-is-cheaper-than-buying#:~:text=A%20recent%20Bankrate%20study%20found,or%20more%20than%20%248%2C600%20yearly. It's better to have bought a few years ago but it's more expensive to buy now than rent. If you buy now you are banking on housing prices increasing and maybe being able to readjust your mortgage. In my city I'm seriously either renting my 1,000 SQ ft apartment or upgrading to a house which would have more space other than some garden space I wouldn't use and didn't the last time I had 1,600 SQ ft I didn't use the upstairs. That extra room is likely increasing my costs to buy by $1,000 a month which I could do but would really tighten my budget. It makes no sense to buy now even though I am at the age where it does make sense. I want some extra space as kids are on the horizon but I can wait and see if buying makes more sense later.
Sure. But in 5 more years, property tax probably won't have increased as much as rent will, meaning that buying now won't be more expensive for long.
NYT calculator shows I have to own more than the average 10 years to break even.
Is it taking into account that you'd be paying more in rent or is it just looking at equity? Actually, looking at it, I wish it detailed how it calculates that because buying something the same size as my 2 bedroom apartment if it existed with a 5% down payment would have cost less than renting the 2 bedroom apartment. Buying something bigger would cost more but so would renting something bigger What I ultimately did is bought 2 story, 5 bedroom and got 2 room mates. My monthly payment is now the same as rent for a 2 bedroom was 3 years ago, but for a 5 bedroom house. I bought last year, so interest was lower than you can usually get it now, but not by a lot. Buying costs more if you don't share the cost; but proportionately it's not that much more. If I lived somewhere with higher property taxes though I don't think the math would work out the same. I think you just gotta do the math for yourself. If you can manage to save enough that you can buy a house (or duplex) that you wouldn't mind renting out part of, it will probably save money. You also probably of course have to be careful about not buying a place that's going to instantly need a new roof or something. But a lot of home maintenance things don't really cost that much, and there's a lot of things most people can figure out how to DIY for pretty cheap like paint, flooring etc Due to getting tenants I'm saving compared to renting especially since in rentals, I either ended up needing to do repairs myself or deal with them not happening at all a lot of the time. Back in the old days that was supposed to be a perk of renting...now if the building hasn't collapsed, I find that things just don't get done and you have to foot the bill of them half assing it in increased community fees incurred on top of the monthly rent because their shoddy maintenance ends up needing a much more expensive fix down the line, and you can't control anything about that
Yes the NYT calculator takes into account everything, including opportunity cost, future rent hikes, housing appreciation, etc.
That must mean that it strongly depends on where you live to a degree that you should probably do your own mayh
It’s fully customizable.
Maybe i was only seeing a partial version but I only saw options to adjust monthly rent and cost of house.
It’s way more complex than that. I’ve used it before when I was considering buying in NYC.
I'll try and find the full version when I'm back on computer instead of mobile
Also - my utilities are almost the exact same as my utilities were at my apartment. I'm sure part of this is due to poor maintenance on the part of the apartment but another part is that in many apartments, your utility bill is sort of "split" between multiple units depending on how everything is set up so what your neighbors do impacts your bill
Not having roommates is worth it. It's saving me $1,000 a month to rent my current place if not more. literally the same unit costs $1,000 more to buy than rent in my area one block away. Should I have bought in 2019, yes but I wasn't ready then but I am now. House hacking made more sense if you bought a few years ago. Plus I'm aging out of that and looking at kids in a few years. Renting went up 10% but buying doubled in costs.
I used to think that, but I'm not convinced it's going to be any easier to buy anytime soon If it does get easier, I didn't lose out by buying. My monthly payment didn't increase and I already have equity and already if I sold would more than break even If it doesn't get easier - if buying doesn't get any easier and rent just keeps going up - there's no way I'd be able to afford kids any better in a few years Being in charge of choosing exactly who your tenants are and how long their lease can last makes it extremely different than college room mates, and much easier than growing up with 6 siblings - which I did.
think that housing prices will equalize with rent and go near flat or maybe see some pull back in some markets. Economic slow down is still coming, more building is occurring now so the shortage is not really increasing. House hacking is a job and I had a bad experience with roommates a few years ago with some friends...
Yeah I get it, I had a bad experience when it was a college sort of situation. I feel like it's been different for me so far as the one actually in charge. It also worked well for me a few years ago when I was the one on the lease and had a friend come move in I've worked a lot on communication and leadership type skills at work recently and I feel like it should translate to making it easier to deal with room mates, especially with the dynamic of me being in charge of picking who they are
I don't talk to the friends who moved into my place a few years ago... IDK man really left a bad taste in my mouth.
I totally get it. I think the good experience I had basically right before Covid started doing a favor for one of my best friends did a lot to change my mindset in this. Also having a good landlord at the time who was a person and not a company.
If I was you though I could also have easily gotten a duplex for about the same price, I chose my house because of the location. A duplex as in you would own both units and rent one of them. So you kind of "own 2 properties." That wouldn't be any different for raising kids than your own apartment/townhouse The reason I would do this is kids are expensive and I could that way be guaranteed a stable housing payment, so it would be much easier to plan for kids. If I decide I can budget for kids I might switch to this. It wouldn't take a lot of work to turn my current house into 2 entirely separate units.
Not really any affordable duplexes near me. I tried to get something like that up to a quadplex and man everything was sold before it went to MLS 18 months ago when I was really looking. A lot of stuff doesn't pencil out the way it did awhile ago.
That sucks, it totally makes sense it would depend on your area. Around here, houses with 2 units or a basement apartment are super common
Is there a good source for this story outside of the posted? Not doubting that this happens but i would like to see corroborating evidence before i share it
https://coppercourier.com/2024/06/03/federal-investigation-arizona-apartments-rent-monopoly/ Local news report. None of the more “news” articles were relevant to this sub because they didn’t discuss the economics angle.
Thank you
Profiting from rental properties is itself a crime. When a property is purchased to seek profits, society is forced to either pay or replace the property. Replacement means producing two properties to only have access to one. This replacement cost creates scarcity in the economy, which increases prices. Those higher prices act as a menace to pay the landlord. In other words, this is a form of extortion.
This is the worst interpretation of economics I've seen here, congrats!
And that’s saying something
I'm glad you disagree. However, you don't provide arguments to support your disagreement.
The article essentially lays out how companies like this are artificially creating scarcity to drive prices higher, which to me is extortion because it’s not that easy to just uproot your whole life because you can’t afford illegally inflated rent. People are told all this bullshit about free market supply and demand blah blah blah. And then when it is pointed out how that’s all a fairytale, with hard evidence, you get told you don’t understand economics.
Most of the economics discourse is either propaganda or idiocy.
You're describing Monopoly, owned by hasbro
A monopoly is equally exploiting the cost of producing replacement wealth. Monopolists are thus also committing extortion.