San Francisco to Ban Rent-Setting Software Amid Gouging Worry • Hacker News Board

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#31

Post by larsiusprime » Mon, Aug 05, 2024, 8:42 PM UTC

kspacewalk2 wrote: post #24

Eumenes wrote: post #19

Earlier quoted context omitted.

Assessments should be done when a home is sold, not based off speculative real estate market. This hurts everyone, esp those on fixed incomes.

Okay, maybe I'm making unwarranted assumptions that assessments are done the same everywhere, and property taxes are decided on the same way everywhere. Here's how it's done in Ontario where I live: 1. Assessed value ≠ market value. Assessed value is determined by some criteria such that sqft, #rooms, desirability of neighbourhood, pools, etc correlate with the final value. 2. Actual value doesn't matter at all. If e…

In California Prop 13 makes it so people who bought their properties decades ago essentially have their assessments frozen whereas people who bought more recently get assessed closer to market value.

This means that two side by side buildings can have assessed values differing by orders of magnitude. This has all the inequitable downstream consequences you would expect.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#32

Post by falcolas » Mon, Aug 05, 2024, 8:52 PM UTC

SoftTalker wrote: post #3

Ignoring the elephant in the room which is that by their own doing the housing supply is woefully inadequate.

It is, by the most recent data I can find, short by between 4 and 7 million homes. But other reports state that there are in excess of 10 million homes sitting vacant. No, the two numbers are not interchangeable due to location of the homes, but they're both pretty low.

That means that the shortage is between 3% and 5% of the total homes available in the US (around 140M). And given there are under 700k homeless in the US (I wish it were lower, but it is lower than I was expecting before looking it up), most people are finding homes to live in.

By most measures, and given how new homes are being built every single day (and are very, very likely being sold as soon as they're up), it's not even remotely close to "woefully inadequate".

And for a moment, let's just say we agree and the supply is woefully inadequate. Two things can be true at the same time. A shortage of housing supply dovetails nicely with landlords colluding to identify the highest possible price point for their housing.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#33

Post by davidw » Mon, Aug 05, 2024, 8:58 PM UTC

falcolas wrote: post #32

SoftTalker wrote: post #3

Ignoring the elephant in the room which is that by their own doing the housing supply is woefully inadequate.

It is, by the most recent data I can find, short by between 4 and 7 million homes. But other reports state that there are in excess of 10 million homes sitting vacant. No, the two numbers are not interchangeable due to location of the homes, but they're both pretty low. That means that the shortage is between 3% and 5% of the total homes available in the US (around 140M). And given there are under 700k homeless in th…

There absolutely is a housing shortage in the places people want to live. That's why prices are high. The economics here are pretty basic ones of supply and demand.

> And for a moment, let's just say we agree and the supply is woefully inadequate. Two things can be true at the same time. A shortage of housing supply dovetails nicely with landlords colluding to identify the highest possible price point for their housing.

And yes, they do dovetail. The best way to cut landlord profits is to give tenants a lot of options. RealPage is not a good actor - there's no real upside to it from what I can tell. I'd be fine if they just went away. However, broadly speaking, given more supply, rents fall. There is just tons of empirical evidence for that at this point.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#34

Post by falcolas » Mon, Aug 05, 2024, 9:09 PM UTC

davidw wrote: post #33

falcolas wrote: post #32

Earlier quoted context omitted.

It is, by the most recent data I can find, short by between 4 and 7 million homes. But other reports state that there are in excess of 10 million homes sitting vacant. No, the two numbers are not interchangeable due to location of the homes, but they're both pretty low. That means that the shortage is between 3% and 5% of the total homes available in the US (around 140M). And given there are under 700k homeless in th…

There absolutely is a housing shortage in the places people want to live. That's why prices are high. The economics here are pretty basic ones of supply and demand. > And for a moment, let's just say we agree and the supply is woefully inadequate. Two things can be true at the same time. A shortage of housing supply dovetails nicely with landlords colluding to identify the highest possible price point for their housi…

> However, broadly speaking, given more supply, rents fall. There is just tons of empirical evidence for that at this point.

That will depend, honestly. The popular narrative that backs this is the 1-2 property landlord who can't afford to leave their units vacant.

The problem is that this type of landlord owns fewer total units than those who own 25 or 50+ units. And those kinds of landlords are both becoming a larger majority (their share of ownership is constantly growing) *and* they have the ability to let units sit fallow to keep the prices on the remaining stock high.

That is to say, empirical evidence is not the final authority in a market that doesn't resemble what it did even 10 years ago.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#35

Post by janalsncm » Mon, Aug 05, 2024, 9:13 PM UTC

SoftTalker wrote: post #28

janalsncm wrote: post #9

Earlier quoted context omitted.

Sure, but if you have this kind of underlying issue any extra supply will be eaten up. And that’s after spending a long time and a lot of money to build new housing. Places that use RealPage saw big increases in rent even if their supply wasn’t as constrained as SF.

Unless you have people willing to sit with unrented houses, no it won't. Some big rental owners might be able to afford that but the guy with one or two rentals he manages himself cannot afford to let them sit empty. RealPage may maximize rents but the maximums will be lower if there is more supply.

The YieldStar algorithm doesn’t try to minimize vacancy rate, it tries to maximize income for the landlord. So yes, it can be optimal to have a seemingly high vacancy rate if your tenants are paying more.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#36

Post by davidw » Mon, Aug 05, 2024, 9:15 PM UTC

falcolas wrote: post #34

davidw wrote: post #33

Earlier quoted context omitted.

There absolutely is a housing shortage in the places people want to live. That's why prices are high. The economics here are pretty basic ones of supply and demand. > And for a moment, let's just say we agree and the supply is woefully inadequate. Two things can be true at the same time. A shortage of housing supply dovetails nicely with landlords colluding to identify the highest possible price point for their housi…

> However, broadly speaking, given more supply, rents fall. There is just tons of empirical evidence for that at this point. That will depend, honestly. The popular narrative that backs this is the 1-2 property landlord who can't afford to leave their units vacant. The problem is that this type of landlord owns fewer total units than those who own 25 or 50+ units. And those kinds of landlords are both becoming a larg…

The claim that "supply and demand" somehow do not apply to housing as they do most goods is an extraordinary one, and extraordinary claims require extraordinary evidence.

Once again, yes, RealPage might be able to push things a few percentage points up and that's bad, but it is simply not capable of turning Houston prices into Los Angeles prices.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#37

Post by janalsncm » Mon, Aug 05, 2024, 9:20 PM UTC

dmoy wrote: post #20

blackhawkC17 wrote: post #16

Earlier quoted context omitted.

Source? That seems like the laughable lie that originated from a certain TikToker.

GP has confused percentage of purchases in some recent year(s) with percentage of ownership. Also conflated "private equity" with all investor-owned homes (which includes a huge chunk of publicly traded REIT stuff too). Investor-owned in some recent year(s) exceeded 25% of purchases. Private equity was a subset of that. Overall private equity owns like... 1-1.5% of housing units (which includes a ton of apartments).

Yes, 25% of current ownership seems high to me. Most homes have been owned for decades. But percent of new purchases is a leading indicator of where the market is heading.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#38

Post by janalsncm » Mon, Aug 05, 2024, 9:24 PM UTC

blackhawkC17 wrote: post #14

People don't like taking responsibility, so they'll blame an external source instead of tackling the underlying issue—the lack of new housing supply. The same story applies to most booming cities, both in the first world and third world. They'll always blame "greedy landlords," expats, private equity, tourists, and whatever the latest boogeyman is.

Usually any trend is the result of a confluence of factors. There are probably a dozen reasons why rents are up in any particular city.

It seems that constrained supply and consolidation in real estate companies are two causes. Both cause upward pressure individually, but together have an even more powerful effect.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#39

Post by Eumenes » Mon, Aug 05, 2024, 9:27 PM UTC

rangestransform wrote: post #25

Eumenes wrote: post #19

Earlier quoted context omitted.

Assessments should be done when a home is sold, not based off speculative real estate market. This hurts everyone, esp those on fixed incomes.

we already know what happens when assessed values are artificially capped, prop 13 has torpedoed funding for californian schools, among other catastrophic effects.

There are problems with prop 13 (being a bandaid solution to appease the senior/older tax base) but schools in the US are very well funded, when you look at per year/per student in k-12, usually up there with countries like Switzerland and Norway. Its how the money is used that is the problem.

Re: San Francisco to Ban Rent-Setting Software Amid Gouging Worry

#40

Post by falcolas » Mon, Aug 05, 2024, 9:27 PM UTC

davidw wrote: post #36

falcolas wrote: post #34

Earlier quoted context omitted.

> However, broadly speaking, given more supply, rents fall. There is just tons of empirical evidence for that at this point. That will depend, honestly. The popular narrative that backs this is the 1-2 property landlord who can't afford to leave their units vacant. The problem is that this type of landlord owns fewer total units than those who own 25 or 50+ units. And those kinds of landlords are both becoming a larg…

The claim that "supply and demand" somehow do not apply to housing as they do most goods is an extraordinary one, and extraordinary claims require extraordinary evidence. Once again, yes, RealPage might be able to push things a few percentage points up and that's bad, but it is simply not capable of turning Houston prices into Los Angeles prices.

> The claim that "supply and demand" somehow do not apply to housing as they do most goods is an extraordinary one, and extraordinary claims require extraordinary evidence.

The extraordinary evidence is the proof of collusion - which we have. That's all that it takes to corrode away the basic tenants of a free market, and it's why collusion is policed the way it is. It is, frankly, a mistake to play down the impact that collusion between landlords has on the rental market.

"When competitors agree to fix prices, limit production, or engage in other forms of collusion, the natural balance of supply and demand is disrupted. This disruption typically results in higher prices for consumers, as the competitive pressure that usually drives prices down is absent."

"Collusive practices can also lead to a misallocation of resources, as they distort market signals that guide investment decisions. In a competitive market, prices signal where resources should be allocated to meet consumer demand most efficiently. When prices are artificially set through collusion, these signals are corrupted, leading to resources being channeled into less productive or less needed areas."

https://accountinginsights.org/collusion-in-markets-detectio...