Comment by JamesBarney

Comment by JamesBarney 10 months ago

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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

flimsypremise 10 months ago

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.

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  • ProfessorLayton 10 months ago

    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.

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    • ethbr1 10 months ago

      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.

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      • ProfessorLayton 10 months ago

        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.

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    • 7e 10 months ago

      There is never enough housing to meet demand. Once people have housing they breed, that drives up the population and housing prices once more: only now the world is more crowded and shittier. Without habitat control, it will always be this way.

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    • benreesman 10 months ago

      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.

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      • tptacek 10 months ago

        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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        • benreesman 10 months ago

          I didn’t make my point either clearly or well and your scrutiny is merited.

          I also know nothing about living or real estate in Chicago, which is by any measure a “high COL” area. I meant “the Bay and NYC” which I know a little better.

          The phenomenon you describe is real in those two places: home owners try to restrict high-density construction, presumably to artificially limit supply. This seems to be more effective in Palo Alto than in Downtown Brooklyn, where high rise condo buildings go up practically every other week despite lobbying, but the effect is conspicuous in either case.

          NYC is the more striking case by pick your study of available housing going up in a year, flat seekers trending steady or down, and prices spiking all at once.

          But even in your given example: a homeowner pulling some NIMBY kick flip to fuck with black people or line their own pockets or both is by any measure a “market participant”. Manipulating the situation via side-channel to prevent actual functioning markets is what I was talking about whether one is BlackRock or the representative of a podunk HOA.

          The meme that needs to die is that markets work absent referees that make rent-seeking unprofitable. This forum is hosted by an enterprise that began with the noblest of intentions and is now by far the most dangerous clique of insiders to get on the wrong side of in this line of work. It’s a selling point that on BookFace, your first several hundred SaaS customers are in the bag. Far from tearing down credentialism and old boys clubs, which is a grand vision requiring a grand strategy, it turns out that the end state was to stuff a monumental vision into a tiny, tinker-toy strategy as old as clay tablets: reshuffle the local oligarchy in my favor.

          I hear all the time that “it’s not what you know, it’s who you know” in the same breath as some faux-Reaganism: “government isn’t the solution to our problems, government is the problem”.

          The former sounds like how to get a decent pair of shoes in East Berlin in the 1970s, the latter sounds like someone who is on the take.

          Capitalism sounds dope: I hope I live to see it.

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      • zeroCalories 10 months ago

        [flagged]

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        • dang 10 months ago

          Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for.

          If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

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  • Aunche 10 months ago

    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.

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  • 0xBDB 10 months ago

    > 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

    Taking these numbers as given, the obvious explanation is latent demand. A lot of people who used to live five to a 900 sqft. New York apartment are now living 2 or 3 to an apartment instead. Probably the rent dipped briefly before soaring, yeah? People took advantage, and when leases are up, many of those people will presumably consolidate back with their families.

    Very similar to the concept of "induced demand" (which is also really latent demand) with regards to highways. Build new lanes, people who were unwilling to drive before use the lanes, traffic delays stay the same (but with higher throughput, and therefore still a net positive, even if the money would've been better spent on trains).

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  • JamesBarney 10 months ago

    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%.

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    • HarryHirsch 10 months ago

      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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