Let me guess what's gonna happen. There will be a judgement against RealPage, the US being the only country in the world where commercial law is decided with trial by jury virtually guarantees it.
Then rents will start rising even more. Landlords will be willing to do price discovery the old fashioned way, offering it with a high rent and letting the unit stay vacant until someone pays it.
The cat's out of the bag. Now that people understand how much the market will bear with the present shortage of homes, rents are never going to go down.
If RealPage has caused a rise in prices, it's because it showed old assumptions are wrong. Nothing short of mass brainwashing could bring them back. I guess acting against the housing shortage could also solve the issue, but let's be honest, that's never going to happen.
The accusation is that RealPage allows landlords to indirectly coordinate and fix prices across the industry. If this is true, then it is monopolistic price-fixing rather than supply and demand.
Ironically, regarding property vacancy, an earlier ProPublica article about RealPage has this to say:
> RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.
What are you on about? When has price fixing put a downward pressure on the price?
With price fixing, it's as though all the landlords in on the fixing are operating as a single business, effectively becoming a monopoly - it's not like potential tenants can pick a cheaper or a more expensive apartment, since the price is roughly the same across all of them anyway - so market forces can't really adjust prices.
This only works if realpage is causing landlords to leave units vacant. Otherwise the market clearing prices don't change since supply is fixed in the short run. There are accusation of realpage telling landlords to leave units vacant but I'd like to see some better evidence and numbers.
I don't disagree that in most cities with any kind of upward economic development there's an inherent market pressure increasing prices - people will want to live in a city and there's a limited supply. However, what realpage is doing is distorting the upward market force, making the increase steeper than it normally would be.
One could make the argument that this is just capitalism and applying market forces to human lives is always the moral thing to do. I don't believe it is, I care more about the human outcomes of the systems we use. Ultimately, the underlying problem is the lack of housing supply, which is different from Realpage enabling the collusion between different independent landlords exploiting the shortage in housing supply even further.
See. This doesn't make economic sense. In a monopoly, there is a single accounting source. That's not the case in a "price fixed market by multiple players". If I have a single house, it might make sense not to rent it to increase the rent price across board for all landlords. But it makes more sense to rent it at a lower price, for the individual landlord, than let it sit empty.
Unless the whole market is owned by a few big corporations instead of small landlords who are using their second home as retirement or extra income. Oh wait...
At least one of the claims in the suit[0] asserts that it's lower vacancy that lessers want:
As a former industry executive explained, the market structure is "a classic prisoners’ dilemma." Since residential real estate is a perishable resource (if a unit sits vacant for a month, a Lessor can never monetize that lost month of rent), Lessors favored a strategy of keeping "heads in the beds," a term for offering sufficiently attractive lease pricing to maximize physical occupancy levels in multifamily residential real estate properties. Thus, that industry executive opined, while all Lessors "would be better off limiting their rent reductions [discounts]," if any Lessor "lower[ed] their rents while the others don’t, then that [Lessor] would outperform"
I'm personally doubtful as to how intentional the collision actually is/was, but intentional or not, it would still have negative effects from renters' points of view.
EDIT: Nevermind, it's likely intentional:
As one Lessor explains, while "we are all technically competitors," RealPage "helps us work together," "to work with a community in pricing strategies, not to work separately."
And wow:
One Lessor said that the net effect of raising rents and “pushing people out” of the residential real estate leases they could no longer afford, was “10 million in income.”
"If RealPage has caused a rise in prices, it's because it showed old assumptions are wrong."
Your assumption that RealPage (and other software) -powered market is a market is wrong. Its a near monopoly and thus the price is excessive. Everybody has to live somewhere, if you double the rent of (nearly) all flats, everybody will still be willing to pay that doubled price.
To simplify it: altough there are many landlords, they arent each others competitors thanks to RealPage. They are collectively one big landlord holding the city hostage.
> if you double the rent of (nearly) all flats, everybody will still be willing to pay that doubled price.
This just isn't true. Many people would move in together, many others would go somewhere cheaper. That would lead to vacant units and landlords would have to lower prices to fill them.
> Then rents will start rising even more. Landlords will be willing to do price discovery the old fashioned way, offering it with a high rent and letting the unit stay vacant until someone pays it.
And you fix this with a vacancy tax--which we should have whether this kind of collusion is true or not.
Quite often, commercial entities holding apartment complexes are willing to let a property sit vacant because they can tack that onto the end of the financing while accepting lower rent would reset the basis of the financing agreement and force them to cough up cash.
A vacancy tax puts the kibosh on this kind of behavior.
Vacancy tax is insane idea. What is stopping a bunch of crooks scaring away your renters until you sell them a house you intended to hand over to your children?
What does this "bunch of crooks" look like while they are scaring people away? Seriously, I want to know a valid scenario where this happens. It sounds more insane to plan around that being the expectation than a vacancy tax.
Playing whack-a-mole with the most egregious examples of landlords extorting the need for people to have shelter to relocate as much money into their own pockets as humanly imaginable is fun to watch. But it’s not a solution.
Anyone know any actual solutions? I feel landlords need to be removed as a class entirely. Residential property shouldn’t be able to be owned by anyone who does not reside in it (at least “some large X” percent of the year, perhaps).
The solution is called up-zoning and building fast transit to expand the supply of well-located housing.
If you flood the zone with supply, the power of landlords will diminish.
In the 90s, if you came to Berlin and wanted to rent and apartment, the landlord would hand you 3 keys with three addresses, and tell you to "have a look at them and choose one". The rent was minimal and the landlords had no power.
Your proposed solution of making renting an apartment illegal will create A LOT of friction when people want to move.
It will make it impossible for people with bad credit to live in the city. It will expose a lot of people to a lot of interested rate risk. Not everybody wants to be a real estate investor.
It will also not solve the main suffering here, which is that a lot of people want to move into the city, but they cannot, because there isn't enough space.
It has gotten a lot more attractive to people with money, really (a lot of culture, food, etc.), more government departments and associated things there, too.
> It will also not solve the main suffering here, which is that a lot of people want to move into the city, but they cannot, because there isn't enough space.
That is the problem. Berlin and Munich, the cities in Germany with the most insane housing markets, have all space that could be used for housing in the borders already built, under construction or allocated for short-term begin of construction. Even if you'd make policies to "up-zone", it will need decades until housing supply grows because you need to tear down and rebuild all the houses - and that doesn't even include the carbon emissions and resource-waste impact such programs carry. And the suburbs can't really be expanded either, the trains are already filled to the brim with commuters.
We need to get rid of the demand, we need to force companies to not just go to Munich/Berlin/Hamburg/Stuttgart but also the other cities and areas of the country.
> I guess you have never been to any other city in the world if you think that the suburbs are full.
Granted, I've never been to Paris myself, and never in the outskirts of London, but the stories from the Paris banlieues or the 2011 London riots tell enough of a story how fucked life there really is.
> Guess what: you can run more trains, bigger trains, higher frequencies, and you can build new tracks and new tunnels.
I've been born and am still living in Munich. Do tell, where the fuck can you run bigger or more trains here? The stations can't be extended in length, the Stammstrecke is already at a frequency limit that really can't be increased because the people have to get on and off and trains need time to accelerate and decelerate [0], and construction of new tunnels is expensive (as the U5 extension to Pasing is showing) or fraught with massive costs and overruns (see 2. Stammstrecke).
> Why do many companies prefer to move to big cities? Why do many people prefer to live in big cities?
Herd mentality and that there will be more people where they can source staff from.
The thing is, "rural flight" and the corresponding explosion in urban housing prices is a self-accelerating death spiral that cannot be stopped unless political effort is being taken: the less people work in rural areas, the more infrastructure has to close/consolidate to the point it becomes very unattractive, so less children will be there, and so employers will be leaving for urban areas, and so more people will flee, start from begin.
In urban areas, this leads to a lot of issues:
- dense buildings (i.e. skyscrapers) require huge amounts of resources and CO2 emissions to build - they must be made of really solid concrete simply to be able to stand, you can't use wood or other materials for fire safety reasons, fire safety becomes extremely complex and in the event they do burn (like in Grenfell Tower) you're looking at an immense death toll.
- there will have to be an enormous, multi-billion euros/dollars investment into public transit so that it's able to keep up with commuting - and the denser you build housing and employment facilities (offices and production), the denser and more expensive just that basic infrastructure will be. I haven't even included car traffic into planning because that's frankly impossible (and policies like in Singapore and other highly congested areas begin to reflect that reality).
- cities need "green space" like parks, large un-built areas or the Kleingärten you mentioned earlier: people need them for mental health reasons, the city itself needs it to not overheat [1], to draw in fresh air [2], and for stormwater retention [3]. Suuure, you can say fuck all of that, but you'll end up with depressive hellscapes and death tolls as a result. There's a reason why places like South Korea have pretty high suicide rates among developed, wealthy nations [4] - and housing is one of the biggest contributors [5].
- on top of the question of "how to get the people from home to work and back" comes the question "how to provide for these people": anything from water/sewage over electricity and internet to postal/parcel delivery will have to be at insane sizes; for grids this necessitates higher voltages/thicker pipes with corresponding increase in danger from leaks or backhoes
- no matter what you do, housing construction will never be able to catch up with demand, which leads to gentrification as low-income workers are "priced out" and have to endure a massively lower quality of life (long commute times, significantly higher proportion of rent to income, living in housing together with solely other poor people)
- actually owning real estate will become (or, let's be real, is) far out of reach for most people, which means they have to pay rent their entire lives, will never be able to build up wealth, and most importantly never be able to pass wealth down to their children
- both renters and buyers will be complaining about the high prices, with populists blaming immigrants or hillbillies for this issue
On the rural side, the feeling of being "left behind" and the resulting dereliction of everything necessary for life (infrastructure, schools, shopping, healthcare, ...) leads to frustration, that not rarely manifests itself into anti-urban and in the end anti-democratic attitudes.
Particularly the last four points are the ones with the most explosive political/unrest potential... hell just look at the US "flyover states", look at the elections in Hessen and Bavaria. It's no surprise that the far-right has gotten so strong over the last years, as the consequences of rural flight became undeniable.
>dense buildings (i.e. skyscrapers) require huge amounts of resources and CO2 emissions to build -
Just neglecting everything you said after this point because this is insanely ignorant of TCO.
The miles and miles of roads suburbs require not only require massive amounts of concrete to pour, the suburbs require continual sacrifice to the fuel gods to function from each and every one that lives there.
There's also some BS in here about suicide rates, which in the US have a reverse correlation to what you posted.
> So you’re basically trying to say that it is not possible to build a city bigger than Munich.
Oh, it is entirely possible to build a city larger than Munich, Berlin, Paris and whatnot. I never denied that.
The problem is all the side issues that come with density, most importantly suicide and other mental health and general wellbeing issue rates.
> Tokyo is a city that is both bigger than Munich and more affordable for low-income residents than Munich.
Tokyo has one of the most expensive rental markets in the world [1]. No idea about low income residents, having never been there, but I'd guess a massive amount of government subsidies.
Additionally, due to earthquake resilience Japanese buildings are usually torn down after 20-30 years [2]. That makes it "easier" to upzone - here in Europe this sort of policy would be completely unacceptable because we value the architectural history of our community and because of the effort and resource usage involved.
> The problem is all the side issues that come with density, most importantly suicide and other mental health and general wellbeing issue rates.
Density in itself doesn't drive suicide rates. There's a lot of factors that go into this, and it's reductive to blame this simply on density.
> Tokyo has one of the most expensive rental markets in the world [1]
You're linking to an article about luxury rentals and using that to say Tokyo has one of the most expensive rental markets, but that's misleading at best. Yes, you can pay a lot of money for the high end apartments here, but you can also find super cheap apartments in central tokyo, near the yamanote (central) line.
> No idea about low income residents, having never been there, but I'd guess a massive amount of government subsidies.
There's government housing, which is super popular, but it's not considerably cheaper than market-rate housing. The biggest difference is the lack of fees and deposits. Government housing is a drop in the bucket of overall housing though. Low-income people live in cheap apartments, or shared houses.
> Additionally, due to earthquake resilience Japanese buildings are usually torn down after 20-30 years [2].
Though houses were historically torn down after 20-30 years, that's becoming less frequent as construction quality has increased, and as the current earthquake standards are quite high. This is also not true for highrises and lowrise multi-housing complexes.
Zoning does play a large part in this, as Tokyo's zoning laws are considerably less strict, and don't allow NIMBYs to stop construction.
Then they will rebel, and discover the unholy power of modern drone based warfare. After which they'll be replaced with more technology and low paid laborers from other nations.
And as I come from a family of midwestern farmers, I'd say that your revolution fantasy is just that. They tend to embrace high technology pretty damned willingly. This is what is leading to the country side emptying out. We don't need 50% of the population to farm any longer. In another 40 years we may not need 60% of the population to sit around in offices typing out code. These are things both the rural and urban populations in nations need to work on finding solutions to rather than fighting each other.
Isn't "build more homes" the same as solving traffic by adding lanes? Why wouldn't housing suffer from induced demand?
If suddenly a city were somehow flooded with supply of homes, wouldn't more people decide it now makes sense to move to the city, and prices would rise back up?
I am a pretty staunch supporter of car-free cities.
But I have to admit that adding another lane does allow more people to use the road. Even if everybody ends up stuck in traffic again, overall more people are able to get to work or wherever they want to go.
That being said, I still think that with correctly priced externalities, and when offered the choice, that most people would prefer to bike or take the train.
Induced demand is really supressed, and sometimes non-measurable demand.
If your roads are jammed, some people who want to take trips on them will take other means or abandon the trip. If additional lanes are built, trip capacity increases, and more trips are taken. Sometimes the amount of supressed trips is such that traffic jams continue to the same extent as before... but that's unusual --- when Caltrans widened the 405 in west LA, morning and evening jam duration was significantly reduced; but population growth continued and trip demand growth continued, and the jam duration grew.
It's the same with housing. A lot of people would love to live in (city you like), but can't because it's too expensive or too hard to find a place. It would take a lot of construction to change that, but incremental construction is still brings supply closer to demand; even if the difference is hard to spot.
There's certainly places that have sufficient roads that there's rarely a traffic jam, and that have sufficient housing such that it's affordable enough for all who want to live there... those places tend not to have a lot of traffic density and not a lot of people density either.
The most effective way to make housing affordable is to make the city undesirable to live in, but that's not typically a popular method. It also tends to make traffic better, too.
The only real factor here is supply/demand. There are no good ways to control demand, so the only solution is to increase supply. Here are some ideas:
* Get rid of anti-dorm laws. There are laws in a lot of places that limit dorm style living by limiting the number of unrelated adults who can live in the same residence. However, this is the most economically efficient living situation.
* Change zoning. A lot of cities have most of their residential land zoned for single family only. Just change everything to multi-family. Remove requirements like having to conform to the character of the neighborhood, having to build parking spots per residence, having to have increased height based setbacks, needing to have a certain amount of land reserved for green space, etc.
* Remove construction limits. A lot of places have a building plan where they only approve so much building over a period of time. Just say yes. Change to a "shall issue" model, where the government needs an affirmative reason to deny a permit and has to do it within a certain time period for certain well-recognized reasons.
I'm not saying that all of these are good ideas. There are problems with all of them. And all of them will be unpopular.
But they should all increase the supply of housing. Which is the same thing as decreasing property values. Which is why they're all un-popular.
Cities are far more efficient than having everyone smeared across vast swaths of suburbia. And changing culture in a targeted way is not exactly an easy thing to do.
I don't think that's possible (other than indirectly such as by improving high speed rail so people can benefit from cities without living there). By their nature cities provide greater access to desirable amenities such as art, culture, museums, and niche hobbies.
For what it's worth, when I moved to NYC I was surprised that there were so many parks. I haven't looked into the history in order to confirm this, but it looks to me like as rectangular buildings were constructed on pieces of land the extra "corners" got turned into parks; resulting in tiny triangular parks all over the place.
There are: instead of just letting every DAX or international megacorp to settle in Munich/Berlin or expand at will, force them to go to other cities instead.
The only thing in that list that reduces the quality of living is removing green space requirements. Having a multi-family building in your neighborhood doesn't affect your single-family home.
Reducing parking requirements _may_ reduce quality of living, if public transportation isn't an option.
Japan solves the parking problem by requiring you to have an off-street parking space to own a car. Removing street parking increases the amount of land available for use, makes the city more walkable (and bikeable) and reduces car ownership.
I'd go with Singapore as an example and suggest government-managed Skyscrapers. Lots of units and everything is standardized so you get the best possible bang for your buck. It also makes moving around pretty easy if both houses have the same landlord and similar units and similar prices.
"In Singapore, nearly 80% of the population resides in housing that is developed and managed by the Housing and Development Board. Units are owned, however, by tenants. The government, following a land-lease system common in other city-states, owns the land and leases it out for 99 years to these unit owners."
What the 80% statistic doesn't convey is the fact that you have people delaying getting married and continuing to live with their parents because HDB supply can't keep up with demand. See also the insane valuations for resale flats.
The thing is that property letting is a useful service to society. If you intend to live somewhere for more than 3 months but less than 3 years, it makes a lot of sense to rent somewhere. I guess you could still have live-in landlords, but that's quite awkward if the tenants are a family or group of friends.
People say this. Then I run into landlords who proudly talk about how their tenants are paying for all of their expenses and more or how they find ways to avoid paying for important amenities.
Absolutely. I am not defending landlords. I think a horrendous proportion of them are corrupt like this. The system needs heavy regulating but I don't think it's a good idea to disband it completely.
Rental flats can totally be a thing without private landlords in the picture - rental companies that are either government owned or follow strict government guidelines for example.
In my (UK-centric) experience it is largely the rental companies that make renting a nightmare. Back when I was a renter I would always look for private landlords when moving house as they were often more reasonable and responsive. Big rental companies would respond slowly, issue exorbitant fees, demand professional end-of-tenancy cleaning, and screw you on pre-existing damage if you don't point it out in time.
Salt Lake City has this, I believe. If you're in the COLDS (never noticed this acronym before!) then you might well be working for the church, banking with the church, and renting from the church.
Making landlords compete with low-cost government subsidized housing. Vienna[0] is a fantastic model. Though I think implementing this in the US has a lot of stigma and challenges to overcome (ie, how can the government mass purchase apartments/land to create subsidized housing).
Also, cooperative housing. A group of people buy a property with a Loan, and the cost of the loan + management is payed by all people in the apartment. Eventually, the loan is payed off and the cost of rent is lowered to cover only maintenance/mangement. This also has to come with restrictions about ownership and renting out the apartment. Because its ultimately a collective, its unfortunately totally possible there will be biases at play with these kinds of housing setups (ie, biases against allowing POC to move in, disagreements on how common space can be used).
And lastly, fast public transit to expand the area its possible to live by people who can't afford cars.
I found this youtube video[1] about the Vancouver housing situation interesting. Maybe a bit over-simiplified, but gives you an idea of some possible solutions.
I know these aren't silver-bullet solutions. But I think it helps think of this in a different way then just a supply/demand problem. Its also a policy and profiteering problem.
>And lastly, fast public transit to expand the area its possible to live by people who can't afford cars.
Can't be done in North America. "Fast public transit" means subways (or trains on elevated tracks), and these are really expensive to build and maintain, so the economics don't work out unless you have a lot of ridership, and that only works if you have high enough density. So in Tokyo, it works great because the density is very high and ridership is enormous, so the city can afford hundreds of subway stations with trains running every 3-5 minutes. But in a typical American city, everything is SO spread out that it just won't work: it's too far for most people to walk to the station, having to drive to the station just adds more overhead plus having to deal with traffic with everyone else going to/from the station and looking for parking, etc. Of course, you could try a model where developers build huge, dense, mixed-use developments at the stations, but that's pretty hard to get done when all that land is already owned, and there's NIMBY zoning laws preventing such housing developments anyway: each such station would be a huge, expensive, long political fight.
Honestly, I don't really see a solution; too many Americans think this kind of thing is anathema anyway, so the political will to make any of these ideas a reality is unlikely to materialize.
> Can't be done in North America. "Fast public transit" means subways (or trains on elevated tracks), and these are really expensive to build and maintain, so the economics don't work out unless you have a lot of ridership, and that only works if you have high enough density.
No, it can be express buses with 100% dedicated bus lanes and fewer bus stops. Of course, that will require removing some standard lanes and converting them into said dedicated bus lanes.
> But in a typical American city, everything is SO spread out that it just won't work: it's too far for most people to walk to the station, having to drive to the station just adds more overhead plus having to deal with traffic with everyone else going to/from the station and looking for parking, etc.
This can be solved with multi-modal traffic with a mix of bikes and buses. This again will require removing standard lanes and converting them into protected bike lanes, and while that's happening and considering the width of the average lane, a green shoulder with trees that separates the road from the bike lane and from the newly added sidewalk.
> Honestly, I don't really see a solution; too many Americans think this kind of thing is anathema anyway, so the political will to make any of these ideas a reality is unlikely to materialize.
However this is what kills any of these proposals, in practice :-)
I agree with your point about the political climate and NIMBYism for sure.
I think "fast" is subjective. Depending on city size, car culture, etc. Buses with dedicated lanes could be pretty fast. I suppose what I should say is, comprehensive public transit. And maybe not always out to the rural areas until we have good connections to the suburban hubs.
As far as economics, much like Agriculture, Housing and Healthcare the economics will never really work out. They will run at a deficit and require government subsidies because they are necessities.
Often with these things its a vicious cycle.
People don't use Public Transit --> Because its slow and doesn't cover everywhere -->
Because adding stops and more vehicles costs money -->
And there's not enough money to improve it -->
Because People don't use public transit -->
... repeat
If we improve transit, make it more convenient than driving (banning cars in certain metropolitan areas, making it cheaper than gasoline, etc.) Then likely over years the US could transition.
Though I agree, tis a pipe dream at this time in history.
>Depending on city size, car culture, etc. Buses with dedicated lanes could be pretty fast.
Dedicated bus lanes would help I'm sure, but I still don't see how this could ever be "fast" when buses still have to stop at intersections for red lights. It's what makes driving in a denser city so slow. Trains and subways don't have this problem.
>They will run at a deficit and require government subsidies because they are necessities.
Not true. The trains in Japan aren't subsidized and run at a profit from ridership. You could argue that they got some "unfair" advantages in their initial funding for construction, but as it stands today for ongoing operations, they don't need subsidies; they generate a profit for their owners. Moreover, the companies running many of the trains are really real estate companies: they own big stations in certain places, and then build big complexes around those stations. Build it and they will come.
>banning cars in certain metropolitan areas
The biggest thing to do is simply make it horribly inconvenient to use a car, by not having any free parking. If there's no place to park except some extremely expensive parking lots that might be a longish walk from your destination, people won't drive.
I wonder if frequency and hours get overlooked in these discussions. In my experiences one of the things that made the NYC subway more enjoyable than other systems is that the trains came frequently (so I didn't have to schedule when I got to the station and if I missed a train it wasn't a big deal) and they ran 24 hours a day (so I could do things like go to a bar and not have to worry about getting home).
I used to live in a smaller city, the busses would come every 15 - 30min and then after midnight every 1hr. It was hard to rely on, if you miss a bus you could miss an appointment, after bar close, you had to rely on Taxi and Uber.
Now I live in a city where buses/trams come every 9 and subways come every 4 during peak hours. I don't even own a car anymore!
> "Fast public transit" means subways (or trains on elevated tracks), and these are really expensive to build and maintain, so the economics don't work out unless you have a lot of ridership, and that only works if you have high enough density
There are lower volume fast public transport mechanisms; BRTs (ie bus systems with largely fully segregated lanes) or high quality standard bus systems with partially segregated lanes. Somewhere in between are trams.
The big downside of a bus system is that it _does_ have volume constraints (even if you have mostly-segregated lanes, you'll start to run into trouble with stops) but it can work pretty well for low-volume scenarios.
there are a few dozen cities with a population density high enough that they could have much better public transport.
for example compare stuttgart in germany with los angeles.
stuttgart has half a million inhabitants. LA has 4 million. both cities have a very similar population density of 3000 people per sqkm.
stuttgart has 350km of rail and about 300 stations.
los angeles has 175km of rail with about 100 stations.
now, i don't know how much the stuttgart network extends beyond the city. i only looked at the city rail, and ignored regional trains. but i didn't spend much time to research, so i am going to guess on the safe side that it's city rail network serves 1 million people.
for LA to compete with that it would need 1400km of rail with 1200 stations. so, it could be 10 times as large.
another comparison, vienna: 2million people, 4500 per sqkm. 1100 stations on 250km. most the stations are light rail, which is very dense.
in other words, the population density argument is nonsense. there are plenty of cities with a population density of 3000 people or more per sqkm. and none have public transport comparable to european cities.
the problem is not density. the problem is how many people are willing to use public transportion instead of cars.
if you can motivate more people to use public transport, then you can grow the infrastructure.
this is something that will only change slowly as public transportation improves. if you can motivate more people to use public transport, it will grow. even european cities have not reached the end yet, and many cities are investing in more rail.
> But in a typical American city, everything is SO spread out that it just won't work
Stop calling them cities then! They're just endless suburbs and strip malls, which makes for a really really large town. If they're not dense enough to do what cities do, they're not cities.
there are a lot of people who need shelter who have not accumulated the wealth needed to purchase a dwelling in the economic framework of today. how will those people be housed? mass public housing (aka the government is an exception to this rule)? who is owning/maintaining/orchestrating that housing operation? and when people can buy, who are they buying from, once everyone has met this rule?
it's a far more complicated problem than "landlord bad". Renting is a valuable option for expensive necessities that often times aren't as useful permanently owned (cars, ski gear, houses).
the problem is that incentives are terribly non-aligned, given majority of people need to rely on renting.
here are some of my ideas (as a long-time renter who owns a co-op unit since the pandemic)
- make "projected housing capacity growth rate guarantee" for every residential-capable zone a policy — every <N> years, evaluate each zone for meeting that growth rate, and slate lowest density housing in that zone for demolition with large bounties for developers to claim the permits to build denser (usually taller) housing than the existing densest housing within the zone. The densest zones of the city can extend N by some factor each time. (that's a rudimentary version of the idea)
- rent payments up to a certain amount per household member should be tax deductible commensurate to market rate in the region, so that home ownership doesn't immediately become tax optimal.
- property taxes should be tied to market rate rent and market rate home values in that region so that home owners are not incentivized to prop up inflated rental prices when they aren't actively renting out, or to inflate home valuations when they aren't actively in the market to sell.
- home ownership beyond primary residence should be taxed more significantly than it is.
- tax developers constructing and/or operating luxury housing at different tiers (factoring sq. footage/room, amenities, starting lease prices)
Landlords are bad when the lack of tenants protections, such as in the UK, makes it so that often the only options available are living with rats and mould or being evicted for protesting. People that bought flats as an alternative to a private pension or small “professional landlords” are especially bad. Building more doesn’t necessarily fix this problem, because research costs are extremely high for tenants even if flats are very cheap.
Germany has a housing shortage, but people don’t end up homeless or dying of mould, because the tenant would just withhold rent and crush the landlord in court.
Said that, I agree with all your ideas, especially tying taxes to market rent (in Switzerland, if you own property, the average rent for your area is added to your income in your tax return), apart from the last. 1) Luxury housing is better than nothing, 2) demonising luxury housing (that in the UK means having a working lift and renovated windows and maybe air conditioning) is a way of blocking all new builds.
Switzerland has an imperfect system with some good features. Landlords can't raise the rent without cause. The cause can be that the variable mortgage interest rate went up (and the tenant can reverse the increase if it goes down), or that the unit has been remodeled.
The government can also apply a global increase or decrease to rents in a city, based on study of the market conditions.
The tenant can object within X days of signing that the previous tenant's rent was less. That rent has to be made available for comparison. That makes it hard to raise rents by kicking people out.
There are many additional parts that the Swiss get wrong, but the above is a good start.
One of the other nice features of Swiss rental law is "imputed rent", which is rent the government assumes you have collected even if the property is empty, and upon which you are taxed. Discourages keeping properties empty.
> Your landlord must give you a clear explanation for raising your rent. Justifiable reasons could be an increase in the reference interest rate, inflation, increased maintenance costs or an investment that increases the value of the property e.g. the installation of additional kitchen appliances.
It is interesting that there is no hard cap mentioned. Inflation, interest rate and maintenance cost all skyrocketed last year, would a 5 percent rent increase be possible? Or could that be refuted?
For comparison, The Netherlands has set a max rent increase of 4.1 percent for 2023. In 2022 this was 2.3 percent.
Price controls are great for incumbents, but suck for new-comers or even incumbents who want to move. Disabling price as the allocation mechanism does nothing to address the supply/demand problems, and necessitates alternative allocation rules (waiting lists, insider connections, fit/need-based, lotteries) which all have their own problems.
In the Netherlands the average waiting time for rent-controlled social houses in popular places like Amsterdam and Utrecht now exceed 10 years.
If the rent increase has been determined by market conditions to be 10%, incumbents have their rent increased by 40% of that, so 4%. And it's not asymptotic. If the rent increase next year is 0%, the incumbents still pay just 104% of the basis rent.
Over time, incumbents have unbeatable rent and can't afford to move, and newcomers pay an extortionate amount, which is the present status quo. The Swiss also blame the newcomers for raising the rents, even though they are the victims.
I'm pretty sure it's tied to the interest rate, it can be higher than the rate interest, but only within a limit. (I'm currently a bit worried by this, but have not heard anything from my landlord)
Coming from the UK, i find the system here vastly more sensible, having been kicked out of multiple residencies in the UK because landlords felt like raising rents by outrageous amounts
In germany, to avoid rent caps, many landlords moved to so called index rent, which is bound to inflation/deflation and there is no cap and can not be refuted.
Though, politics is everywhere, and they want to cap the index rents as well. Make sense, because why can everyone raise prices, while salaries do not automatically rise. There is no balance.
Designated rental vs owned properties is one way to do it, although you're not exactly going to reduce the rental costs by doing that, probably the opposite, but you would decrease property prices.
Heavily taxing empty properties would encourage landlords to reduce rent rather than let them sit empty.
Otherwise the solution is to just build more. High property prices and rent is fundamentally an issue of supply vs demand, no?
At least you have landlords... in my country people hoard real estate and leave the houses and apartments vacant. They simply count on value increase, hoping the prices will level up with prices in rich EU countries. As a result every flip increases the value at least 10%, and the only apartments available for rental are 20-30 sqmt burrows optimized for rent extraction.
This is not some uncharted territory. Western societies just need to stop treating residential property as an investment. Japan would be a great example of such approach.
Japan only really started doing that as their population began to fall. It's a situation lots of Central Europe is starting to experience too. Before then, the land the Tokyo Imperial Palace occupised was worth more than (theoretically, at prevailing market rates) than all of California.
I'm not sure I buy that simplistic argument. As a counter-example, residential property in most exUSSR experienced significant price increase during previous 30+ years while populations of those countries mostly decreased during that time (and often much more significantly than in Japan). Why? Because people were (and often still are) convinced that it is best investment for them long-term.
Up-zoning doesn't guarantee you cheap residential. A lot of highly dense cities are still very expensive (NY, Paris, London, etc.) and will continue to be as long as buying and holding the property is one of the best long term investments one could make.
Some percentage of rentals provide a service for people who are not going to live in a place long enough to be able to pay off enough on a home to make buying it worth it.
Being a landlord is not hoarding. Taking a risk on a buying a property, and maintaining it, is not hoarding. There are bad landlords and good landlords, and yes, with the levels of supply and demand how they are, it's easier to be a bad landlord. But the answer isn't "get rid of landlords". It's "vote out the people causing this situation."
Except people don't require onions to live, whereas shelter... Also, if the onions stayed intact for 100 years, a group of onion lords taking advantage of widespread capital failures could simply hoard onions near-indefinitly, and there would be no "real" shortage, but the market would have a "shortage". This is exactly what is happening in world real estate.
So why they are not voting to get it back? It is not like all kinds of Communist/Socialist parties are outlawed in either exUSSR or ex-Ugoslavian countries, it is just that some old people like to reminisce about it but nobody _actually_ wants it back.
For a certain generation of Yugoslavs, it isn’t just the party that matters but the specific man who led it, Tito. Once he died, even though his party remained, things quickly went downhill for Yugoslavia.
Which alternative do you mean? Communism? Anarchism? Socialism? They all want to abolish rent-seeking and not only, but through very different strategies.
Well the former is the end goal in both cases. It's just lefists can't answer the following question in a single unified voice: what goes away first? The State, or Capitalism?
In USSR and other Marxist-Leninist experiments arguably both the state and capitalism prevailed. The relation of workers to their workplaces didn't actually change - still taking orders, this time not from the owner of the workplace but from the state beaurocrat. So workers actually didn't have control over means of production, just this time the political class and the owner class got combined into one class - the class of state beaurocracy.
> [RealPage's] algorithm is based on pricing data from its own clients, prompting some experts to speculate that the company effectively provides a way for big landlords to collude and fix prices.
This seems like it would only be an effective form of collusion if everyone or almost everyone in the same area used, and therefore fed data into, RealPage. If it's only a small slice of a given city's rentals it seems like it would be much less effective.
Perhaps the real way to fix this is regulation requiring all landlords to publish their rent pricing data in an open and accessible way. I don't know if such data exists or not in the United States, or even here in Finland, but I would be absolutely fascinated to see it.
EDIT: Bloomberg Terminal users, does your magic know-everything machine have this kind of data?
The lawsuit alleges that it controls a decent percentage of the market:
> RealPage collects up-to-the-minute data on the historical and contemporaneous
pricing from participating Lessors, data that, according to RealPage, is updated
“every time [Lessors] make or change a [lease] renewal offer,” spanning over “16
million units,” which is a “very large chunk of the total inventory in the country.”
Can anyone explain why is the lawsuit against RealPage and not the landlords specifically? They are the ones hypothetically doing the price fixing.
Considering the following scenarios:
* A landlord/tenant publishes their rent online: not price fixing.
* A group of landlords/tenants publish their rents online: not price fixing.
* A group of landlords share their rents privately: maybe price fixing?
* A group of landlords share their rents to a 3rd party, which publicly shares aggregated data: doesn't look like price fixing to me.
* A group of landlords share their rents to a 3rd party, which privately shares aggregated data: maybe price fixing?
* A group of landlords share their rents to a 3rd party, which uses ML/AI to predict occupancy rates at a given price; and uses it to maximize expected profits to each individual: doesn't look like price fixing to me, maybe it is if we consider that it is using non-public data.
* A group of landlords share their rents to a 3rd party, which uses reinforcement learning to dictate the best price to set, considering that the same policy will be shared with other landlords: price fixing.
Considering the difference between the two last scenarios, is the lawmaker going to evaluate how sophisticated is the algorithm behind the scenes?
The AG isn’t a lawmaker. p52 of the AG’s contract says False Claim Act, Consumer Protection Procedures Act, Restraints of Trade, and Trusts in restraint of trade illegally.
I highly doubt the algorithm is any more complicated than a couple of rules. The YieldStar guy already got busted by the DoJ for price fixing when he was at Alaska Airlines in the early 90s.
A self assessed Harberger tax would be a really good idea with such data available!
"The idea is to let each owner assess their property at any value they want, but that assessed value becomes a price at which they offer to sell their property to anyone. (Harberger didn’t invent the idea; it goes back at least to ancient Rome.) Posner and Weyl consider applying this basic idea to most all property, and call it a “Harberger tax.” That is, a simple way to create an incentive for low offer prices on any kind of property is to require the owner of that property to continuously pay a fee proportional to their posted offer price, i.e., the price they announce at which they will sell their property. The lower their price, the less they pay." From OB
This system is problematic in high inequality societies. A rich person may decide to kick you out of your home if they're feeling petty. Many people do not want to move, forcing them to sell against their will is incredibly politically unpopular.
There's a fairly major problem with that in our current environment: Requiring every property owner—or even every landlord—to offer their property for sale at a reasonable price to anyone who is willing to pay it is guaranteed to funnel most or all properties in a given area to one or a very small number of large corporations, which are then at liberty to dictate conditions to all their tenants (possibly even beyond the minimums the law specifies, if they're powerful enough to ignore that).
The only way this can be avoided, IMO, is if the law also specifies the maximum rent that can be charged as a fraction of the value of the property (or the fraction of the property a given unit represents). Otherwise, the large corporations can simply buy all the property that is now always on the market, and charge rents just exorbitant enough to make massive profits, while not being quite enough to drive everyone out of the area.
There are in fact 2 rebuttals here, one being the econ 101 answer: If I find out that a large company is gobbling up homes for any price I set on them, then I might as well build way more homes in that area because I've got a guaranteed buyer.
That argument can still be overruled in the short term by pointing at the current zoning laws of many countries worldwide, and the second rebuttal is more interesting anyway: Who said anything about a 'reasonable' price?
The proportionality constant between the tax levied and the listed sales price of the home is a precise instrument. We could just as easily set it to 0.1% per annum, so that people who list their homes for $1m/year still only pay $1000/year in tax and likely never see a serious purchaser, as we could set it to 10% per annum, where a $1m/year house accrues a whopping $100,000/year in Harberger taxes, which leads to people lowering the listed price, WLT many more sales and purchases, WLT considerably more housing liquidity. You could use either tactic to put the squeeze on bad actors, depending on your goals.
Then rents will start rising even more. Landlords will be willing to do price discovery the old fashioned way, offering it with a high rent and letting the unit stay vacant until someone pays it.
The cat's out of the bag. Now that people understand how much the market will bear with the present shortage of homes, rents are never going to go down.
If RealPage has caused a rise in prices, it's because it showed old assumptions are wrong. Nothing short of mass brainwashing could bring them back. I guess acting against the housing shortage could also solve the issue, but let's be honest, that's never going to happen.