Then they got sued by the company that was targeted, and immediately waffled and canceled the ban.
What's insane about all of this is that we also have Rent Control. There is no greater price fixing mechanism than Rent Control. Rent Control ensures that all landlords must seek the highest possible rent, because they are (potentially) tethered to it for life (of the tenant).
So if you create an economic system where sellers never will allow prices to go down, why bother banning price fixing -- its practically baked into the housing code.
Without rent control, rents can be kept constant, moved up, or moved down without having to consider the consequences for years to come. The ceiling is set by the market rate, but there isn’t a function driving all of the landlords to raise by the annually permissible maximum so they try to discover it instead.
Rent control is instituted in cities that have constrained housing supplies, so the demand is there. Landlords switch to raising rents in unison by the maximum allowable amount every year because that’s the only way to operate.
Landlord input a desired vacancy rate or time on Market, and service suggests the right price.
Look at the places without Rent Control that have adopted a pro-housing development stance - rents are declining !
But, that doesn't keep a large staff of people working for the rent board at the expense of the local housing economy
Also, in Dubai if the owner wants to sell and not renew the lease they can. In Berkeley it’s not nearly so simple.
I would not want to be a landlord in Berkeley.
> Our work against algorithmic rent-fixing is starting to bear real fruit. Multiple cities have passed laws prohibiting corporate landlords from using rent-fixing software, including San Francisco, San Diego, Seattle, Philadelphia, and Providence, RI. These laws aren’t complex and don’t require unwieldy market definition, you just have to show that the defendant is using nonpublic information in an algorithm to set prices. And they are being enforced, with six different lawsuits now pending.
1. It goes beyond antitrust guidelines by banning rent prediction using any “non-public competitor data”, which is stricter than the former antitrust guidelines which prohibited sharing “competitively sensitive variables” (https://www.ftc.gov/sites/default/files/attachments/dealings...). To the extent that it differs from banning competitively sensitive data, it is just banning the use of data to make rentals more efficient. If landlords are pricing accurately but not monopolistically, this should reduce turnover, reduce vacancy, and reduce the occasions where a listing gets a crowd of applicants, which is good for both landlord and tenant. It’s bad to try to ban accurate data.
2. It provides a private right of action for tenants and nonprofits to sue, just like Proposition 65 (Known by the State of California to cause cancer) incentivizes bounty hunters to sue. The point seems to be to punish landlords more than it is to establish fair rules.
And it seems that these lawsuits are just piggybacking on the DOJ settlement by punishing anyone who uses RealPage as soon as the ordinance becomes effective in 30 days while RealPage was already working to settle federally. The complaints (e.g. the SF one https://www.courtlistener.com/docket/73573242/gomez-v-greyst...) don’t have any new violations; just companies who are already settling. I don’t think that’s justice for a city to frontrun the federal settlement with new violations for the same program.
2. If you want to live in a house, but for less than 5 years, it is better to rent
3. If corporations really want to buy all the houses, there's a business opportunity for you. Build houses and sell them to the corporations at exorbitant prices.
4. Nobody is making anybody sell their home to a corporation.
5. Renting out homes does not reduce the supply of housing.
6. Homes are crummy investments.
Capitalist countries are indeed quite amazing compared to socialist countries. That's why people flee socialist countries and try to get in the US.
Rules without punishments are useless though.
There’s proportional punishment based on harm, and then there are abusive booby-traps. If a landlord uses a nonpublic dataset (e.g., a vendor’s model based on year-old data that would not harm competition under the antitrust settlement), then a tenant and nonprofit can each sue for civil penalties plus attorney fees even though there is no harm.
Ah yes one of my favorite lines of argument: "We don't need laws, if companies are just behaving properly and against their financial interests to behave in a way that harms legit market pricing..."
Except as we know companies won't behave well without incentives. Which is why we need laws on it.
That’s not my argument at all. We do have federal antitrust law. My question was what does the ordinance do that differs from antitrust. The answer is that the ordinance rewards bounty hunters chasing the same federal case, and also bans non-“competitively sensitive” datasets.
Don't worry, no landlord will die or be maimed in the process.
> based on harm
Most laws don't require direct harm to have already occurred, fortunately.
If one landlord is violating the law, then they deserve due punishment. Law and orders shouldn't stop at landlord.
2. I am a home owner. There is a certain subset of the populace that likes to act as though renters have it so easy, because owning a home is a never ending stream of credit card swipes for the next four (or five) digit maintenance expense - when they're not posting memes talking about not having to pay property tax or insurance or even utilities, as if landlords absorb those out of the goodness of their heart.
These corporations, if you read the article in the first place are colluding across other corporate landlords because if they don't get the rent they want, they would rather keep the occupancy vacant, because then they also get to claim it as a tax loss.
> Capitalist countries are indeed quite amazing compared to socialist countries. That's why people flee socialist countries and try to get in the US.
People don't generally flee socialism, but corruption. But hey, here we are in the US where we're doing a spectacular job of showing what a corrupt capitalist society looks like. And hey, look, the number of people trying "to get in here" is dropping like a rock.
Tens of thousands is not significant wrt 94 million.
> 2.
If you ever owned a vacant home, not only are you still going to have to pay all the usual bills, you'll be dealing with vandalism, squatters, and that undetected roof leak that ruins the interior. Thinking that "tax losses" are the way to make money does not work. If you don't believe me, buy a rental and see how it goes as a landlord. Personally, I want nothing to do with being a landlord.
> People don't generally flee socialism, but corruption
The two go hand in hand. See "Learing Centers".
Never said that. But if I'm a corporation who owns 3,000 homes and/or apartments, I can easily decide that rather than earning less than I'd like on rental income, I might keep those units vacant and claim rental loss to offset my tax burden elsewhere. Helpfully, corporations can also depreciate those dwellings as an asset. Keeping a portion of those dwellings vacant benefits me as a corporation - it doesn't benefit society or the community they're in (or the communities where the offset is going to come from). But hey, fuck society and community, we're a capitalist-over-all nation!
> If you ever owned a vacant home, not only are you still going to have to pay all the usual bills, you'll be dealing with vandalism, squatters, and that undetected roof leak that ruins the interior.
What "usual bills"? Property tax? Insurance? If I own 3,000 dwellings I can self-insure. I can shut off water/sewage/garbage service, I can shut off electricity, internet.
Of course, if I'm a corporation with 3,000 homes, it'd be almost a certainty that I have dedicated maintenance crews who can be mitigating many of those other issues, and doing it far cheaper than you or I could (short of DIY).
Maybe! That said, the improvements on the land (namely, the house itself) are only one piece of the puzzle.
Housing is usually modeled as an oligopoly, where there are relatively fewer sellers than there are buyers, and this model makes some interesting assumptions. The demand for housing is relatively inelastic, landlords have market power, dwellings are not fungible for seemingly myriad reasons, and the landlord is seeking to maximize profit over occupancy.
For smaller landlords, the opportunity cost inherent in leaving a property vacant is often pretty high for the reasons stated here. Paying out obligations, remediating illicit uses, remediating undetected faults in the structure, etc. For these folks, leaving the dwelling vacant is a losing proposition[0].
However, for the more institutional landlords[1] that have a lot of dwellings and, possibly, own most of the rental housing that exists in a particular market? There's an incentive to constrain the supply beyond what, e.g., exclusive-use zoning and arduous design review processes achieve. By the oligopoly model, the fewer of those dwellings they rent out, the more they can command in the price of rent.
Diamond cartels, for whatever it's worth, do the same thing. The same model applies. Welcome to market power.
Housing is a little more fucked in that there's also an appraisal angle, and for rental properties, the comparatives are based on the expected rent. If rents go up, the appraised value goes up. If rents go down, the appraised value goes down.
The appraised value has an outsized effect on the line of credit available to a landlord to continue their investments in real estate in that they have less to offer in terms of collateral on that leverage[2].
--
0: The only real exception that I can think of is when the housing supply is so constrained that the value of the land itself wildly outstrips the value of the improvements to that land. At that point, the land becomes a speculation vehicle, the house on it be damned. California's Proposition 13 exacerbates this by artificially lowering the opportunity cost of keeping the dwelling vacant or otherwise not redeveloping the land it sits on.
1: Real estate investment trusts count. Chances are good that anyone's retirement fund includes one of these.
2: The real estate developer Donald Trump is a notable exception to this rule. Banks, for reasons that baffle the shit out of me, continued to loan him money. There was no due diligence undertaken for most of the loans he received, and it seemed to be based entirely on vibes.
Well, you went on to say it again.
> I have dedicated maintenance crews
They cost money.
As for shutting off utilities, that's a good way to develop mildew in the house. You'll also get rodents moving in, as well as insects. And then there are the teens who use it as a party house. (That's why home insurance is more expensive for vacant houses.)
But hey, don't let me stop you. Sounds like you have a sound business plan of buying homes and leaving them vacant. Let us know how it goes!
Rent control schemes don’t work like this, except in completely broken policies.
Landlords are given an allowance for rent control increases year over year. The point is that they basically have to take the maximum allowed every year to avoid getting stuck.
By legislating prices and price changes, the signal is muddied, and market participants cannot take action to match the movements of the supply and demand curves.
Prop 13’s property tax rate increase cap is also price fixing. These kinds of laws are mostly ways to enrich and reward those who got or were born somewhere first, and run counter to the vaunted meritocracy that a so called free market can encourage.
Edit: The most helpful thing the government can do is maximize price transparency, so the smaller entity can be on equal footing with the bigger entity about which way prices are moving. Tenant agreements should be public record, like land sales are, and that would not only help cops with kicking out squatters, but also give renters more power in negotiations.
I agree that Prop 13 is god awful.
Rent control crushes supply to the degree that the rent control caps rents below the actual market rate.
If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline.
Rent fixing is the other side where supply is manipulated to extract the maximum profit. In this case the coordinated rent pricing action behaves like an oligopoly.
If the balance is far enough off that everything turns into commercial real estate, that can be solved, too.
The bankers defended Trump on the witness stand, and said they'd loan him money again.
Landlords raise rent by the max allowed because they can. There is no “catch up” because the purpose is to protect renters against huge jumps.
I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent. You can own property to rent out, but in a city with a tremendous shortage of housing, you need to rent it out.
I lived in a building with affordable housing units and management decided they would rather not rent them out at all. Horrible.
They would just be taken off the market and then relisted later.
Forcing people to rent their properties and also forcing the price isn’t something I can get behind. People need to be able to choose what they do with their property.
People need homes, and there is a balance to be struck for the public good.
We have a severe housing shortage and these are developers building high-rise apartments. This isn’t me saying you should be forced to rent your second bedroom.
They are getting permits and incentives _to build housing_.
Blaming this on rent control? This entire take is absurd. Because of the simple fact that landlords, especially using this software, do this in cities without rent control.
Unless now type arguing that Berkley rent control forces landlords in cities without rent control to seek maximum rents...
Rent control is flawed, limiting housing stock is flawed. But blaming landlord's pricing behavior on this is obviously false. Simply because it happens without rent control.
Rent control is one of the few topics where the vast majority of economists agree on something. It makes people who don't understand second-order effects really angry when the conclusion doesn't match what they want to see, but it's been proven out across the world so many times that anyone who refuses to acknowledge the real problems with rent control is either uninformed or denying reality at this point.
You just want to talk about rent control. Even when it's not the issue at hand. It's the equivalent of watching a kid fall and skin his knee and someone steps forward to get on a soap box about rent control.
Rent control can be bad, but it's not even close to the cause of every problem in housing. Most importantly, it's not the cause here, and it's absurd to say it is.
No one is entitled to be a lazy landlord taxing other people's existence and its extremely rare for a landlord to have built new houses, they mostly gatekeep the existing housing.
People in california need to take advantage of a populace willing to vote for constitutional amendments and override the politicians.
It's honestly absurd to read this thread because everyone who has ever rented in the SF bay area knows this, yet there's a whole discussion based on some half-assumed idea of what the system is.
By this logic San Francisco should be one of the cheapest places in the world to build
There is no shortcut though, the incentives have to be set right, and there has to be patience for the results to show. Unfortunately, long term benefit at the expense of the short term is a core weakness in democracy.
Market reactions are instant. Once the policy is fixed we don't have to wait for a generation
I’m pointing out that the “it’s my property I can do what I want” attitude needs to be balanced with public needs for housing, because society isn’t purely about optimising the content of your wallet, and extreme deregulation results in slums.
(Your linked paper there also says that rent control results in more properties having affordable rent at the low end of the market, but less overall rental property supply, indicating a reduction at the higher end. I’m good with that as a consequence, those who are better off can usually afford to get into purchasing a property. In some markets, like much of Australia, having fewer landlords and wannabe landlords competing to purchase properties would be a bonus. This actually looks like a win all round TBH.
tl;dr - congrats, you’ve used science to sell me on rent control)
Your conclusion is completely wrong.
What happens when you reduce the higher end of the rental property range? Do you think the people who would have been renting those properties simply vanish? Disappear from the rental market?
No, obviously they don't. So what are they doing instead? They're renting those mid-end properties instead. And what happens to the people who would have rented those mid-end properties that are now occupied by the wealthier renters? They get pushed to the low-end properties. What happens to the people who were trying to get into the low-end properties? They're pushed into being roommates or leaving the city.
Any policy that reduces overall housing supply is a loss for the low end. The way you're bending over backwards to try to imagine this as a good thing indicates something very wrong with your assumptions.
This is a case where someone has become so narrowly focused on hurting the people they perceive as wealthy (people who rent the expensive units) that even solutions that hurt the poor (policies which reduce housing supply) look like a good idea. This isn’t a good way to think.
Why is this so difficult? We will try absolutely anything except to allow enough housing to be built, and then ask why there isn't enough housing. It's madness.
If there isn't enough housing, no amount of shenanigans can overcome that inconvenient fact, except to build more housing. That's it. That is the only thing which can alleviate a housing shortage.
Which, they do all the time, even in places like Brooklyn. It’s been happening for decades. But as you can imagine, it’s a long and arduous process. It’s not like erecting an apartment complex in the middle of a big plain of land in Texas.
Actually yes, entirely unironically.
We even have evidence of this dynamic in Melbourne. When various tax measures were taken that sucked some of the profit out of investment properties, making landlordism less attractive, we saw there was less competition for house purchasing from well-funded investors. This in turn allowed would-be owner-occupiers to buy more houses, as they were no longer forced into rentals they didn't want, no longer outcompeted by those with easier access to larger lines of credit. This reduces the population of people seeking rentals.
Result - decline in the absolute numbers of rental properties in the city, but an increase in rental property vacancy and a slight decrease in rents.
> Any policy that reduces overall housing supply is a loss for the low end.
Except it doesn't reduce the overall housing supply, because overall housing supply includes both rental properties and owner-occupied properties. Those houses don't just disappear.
You're making the (false) assumptions that there is no interplay between the two markets and that everyone that lives in a rented house wants to live in a rented house.