Rent too damn high? Landlords have formed an illegal cartel according to several reports

Submitted by cogitator_tertius t3_ydg7ac in rva

Trying this again because the last post didn't draw enough of a direct connection to RVA.

Bloomberg, Pro Publica, and others have been reporting that landlords have been manipulating rent prices across the country. Several of the largest landlords in the country have been named as defendants in a suit, and some of them have rental property in RVA:

Greystar listings: River's Edge, Sphere Apartments, GEM/INK/VIV at Scott's Collection to name a few

FPI management: Richfield Place Apartments

MAAC listings: Retreat at West Creek, Colonial Village at Chase Gayton, Ashley Park, among others

In addition there are approximately 20,000 smaller landlords not directly named in the filing.

Bloomberg article: https://news.bloomberglaw.com/esg/realpage-major-landlords-face-antitrust-lawsuit-over-rent-spike

Pro Publica article: https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent

Direct link to filing: https://storage.courtlistener.com/recap/gov.uscourts.casd.744996/gov.uscourts.casd.744996.1.0_1.pdf

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Comments

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ChuckIT82 t1_its1p6h wrote

great post well formatted and relevant to RVA’s housing for sure

194

[deleted] t1_itsc4mn wrote

[deleted]

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loptopandbingo t1_itscu6p wrote

If you have a cartel and price fixing by that cartel, it's no longer ChArGiNg WhAt tHe MaRkEt WiLL BeAr, it's market manipulation.

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VAJazzCabbage t1_itsessf wrote

Any econ 101 student will let you know that cartels are inefficient and never work unless they keep the prices low enough to dissuade competition. Like oil. Opec isn't effective at keeping the oil sands out of business by jacking up the price... Infact it's about cheap oil that keeps them rich.

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[deleted] t1_itsfk8o wrote

[deleted]

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PancakesAndAss t1_itsgtci wrote

The issue is not one person doing this.

The issue is when people get together to fix prices like that.

Or should we assume that you a part of this?

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chairmanbrando t1_itshjpt wrote

Their account had no activity until their first comment in this thread, and while I doubt they're a part of this cartel, they probably are a shitty landlord that jacks up rent just because everyone else is doing it.

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StylishSuidae t1_itssl94 wrote

> If u don’t like it, go live somewhere cheaper.

You fundamentally do not understand what market manipulation (and therefore the subject of this entire thread) is.

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CottierDisinflations t1_itsf2ud wrote

Housing isn’t really a ‘I’ll do it if I can afford type of thing.’ It’s kind of necessary for survival.

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[deleted] t1_itsux0a wrote

[deleted]

−11

Ditovontease t1_itu54ky wrote

No one owes you shit for buying up properties and renting it out ABOVE market rate. Like what the hell is wrong with you

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[deleted] t1_itug7he wrote

[deleted]

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Richmond92 t1_ituibul wrote

You’re describing a libertarian lala land that does not exist and has not existed since the era of the Great Depression. And I don’t think I need to tell you why the Great Depression happened. If you had actually taken the “Econ 101” class you’re touting in this thread, you might have learned about cartels, market manipulation, and monopoly capitalism. These cartels are not abiding by some natural law of “supply and demand”. They have collectively taken control of the market such that they no longer need to abide by “supply and demand” economics.

Telling someone to “just move somewhere else” is the sort of argument a 16 year old libertarian kid makes when people start making points about the limits of unregulated markets. These 16 year olds have never had families or maintained jobs beyond 6 months at the baskin robbins. There is far more nuance to the economic landscape than the maxim of “supply and demand”, principally because that maxim doesn’t remotely reflect upon how the real world works.

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[deleted] t1_itsg3bx wrote

[deleted]

−23

MrSpankers69 t1_itsjqg2 wrote

Yea dude literally every other first world country has some sort of rent regulation set up and they’re doing fine lol

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Charlesinrichmond t1_itv342i wrote

no, not fine. Read up on how long people wait to get housing. Or look at the great american success stories in New York City and San Francisco, which are known for being cheap easy places to get rentals thanks to 80 years of regulation... oh wait a minute.

Basically this is entirely wrong. Google it. Or read Paul krugman, a left economist, on why it's idiotic

1

plummbob t1_itskjdh wrote

There are widespread shortages as a result. Wait lists are famously long in places like Munich or Stockholm where wait periods can be nearly a decade.

−25

RVA_Beach t1_itskem4 wrote

Yeah and when everybody “moves somewhere cheaper” who the fuck is gonna work at all the places that make a city function?

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predicktable_x t1_itsunh2 wrote

Where is it cheaper?

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[deleted] t1_itsur3b wrote

[deleted]

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predicktable_x t1_itsvjbz wrote

No, actually it is pretty much the same 15 minutes away in all directions. 😆 The rent is too damn high.

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saltyyellowcracker t1_itszbti wrote

Not true. I looked at apartments in Chester instead of Richmond, and it was cheaper by maybe 50 bucks. Come back when you’ve lived in the real world and not your mother’s basement.

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lostmy2A t1_itsepyr wrote

If the alternative is being homeless I guess 60-70% of their income sounds fair, no? /s

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[deleted] t1_itsfvaz wrote

[deleted]

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lostmy2A t1_itsilbd wrote

Youre just a miserable cunt aren't you

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[deleted] t1_itst0pu wrote

[deleted]

−8

saltyyellowcracker t1_itsz67h wrote

What does a housing market cartel have to do with workers owning the means of production? Or is it just that you have no clue what socialism is, and it’s just a trigger word for you?

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lostmy2A t1_itt9omv wrote

Corporate socialism is so hot right now. Sounds like something you'd be into. You should check it out.

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LostDefectivePearl t1_itub8ct wrote

Do you think you’re the only person here who isn’t a socialist? You’re just the only fucking brain dead idiot here who doesn’t understand that a cartel of price fixing is not capitalism

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dogwithab1rd t1_itsrjvc wrote

There IS nowhere cheaper. I already tried. I hauled my shit 3 hours south to Roanoke and I'm miserable. It was supposed to be "cheaper" and it isn't. Where the fuck else are people like me supposed to go? I shouldn't have had to leave my goddamn hometown, that I adore, in the first place. Not to mention, if people leave in droves, it'll just raise the rent in other cities due to population boom. Reality 101.

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sagegreen69 t1_itt0yzd wrote

Come to Cburg. I pay less than $400 for my share of rent, local fastfood is hiring for 29k per year. That's 17% of income on housing if you work 40 hours.

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dogwithab1rd t1_itt3egz wrote

Hello from Blacksburg! 😁

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sagegreen69 t1_itt4fqq wrote

Howdy neighbor!

Bburg is expensive and more so now than when I first moved from rva. We moved to cburg for the cheap rent and although I seriously miss the bburg community events and parks, I can now afford to save. Hoping to move back to rva eventually. I hope you make your way back too if that's what you want! Rva is special.

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dogwithab1rd t1_itt5ur7 wrote

Howdy! It's nice to see someone who also moved to the NRV from Richmond!

I live with my boyfriend now, and our place is actually really decent, especially given how expensive the rest of this town is. I think we pay about $850 for a 1bd? I used to live with my mom in RVA, and she now pays $1300 for a place in Roanoke. Not nearly as expensive as Richmond, but still far from ideal.

I do hope to go back once he graduates from college. I miss RVA so, so much, but Blacksburg and Christiansburg have wormed their way into my heart too. 💕

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fractalflatulence t1_itug1b3 wrote

Blackburg isn’t Roanoke so lol @ “I hauled my shit 3 hours to Roanoke and it was suppose to be cheaper”

That’s like saying “I moved to Fulton because it was supposed to be cheaper than the fan… hello from Colonial Williamsburg!!”

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dogwithab1rd t1_itvgn2c wrote

You think I don't know that?

TLDR, since you didn't seem to read my other comment: lived with mom in RVA. Mom moved to Roanoke. I moved in with my boyfriend in Blacksburg. I go between the two houses a lot because Roanoke is right there. I said "Roanoke" initially for simplicity, because not everyone knows what Blacksburg is.

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fractalflatulence t1_itvhoce wrote

>I said "Roanoke" initially for simplicity, because not everyone knows what Blacksburg is.

and that's what I was replying to because you were implying that Roanoke is not cheaper than Richmond.

The average rent in Roanoke is $895/month for a 1bdrm apartment. In Richmond it's $1,395 ... 150% as expensive.

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dogwithab1rd t1_itvkc6d wrote

You're right. That right there is why I told her to consider Roanoke. However, she has a 2bd, and there's a million other things that make it complicated. It's really not that much cheaper with her circumstances. There's a countrywide crisis. It's just particularly bad in Richmond, which is why we left.

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fractalflatulence t1_itvlqgu wrote

Maybe you should avoid making general statements when you're really only talking about you mom's specific scenario...ignoring for a second that saying roanoke and meaning blacksburg isn't something any normal person would just assume off the bat.

−1

dogwithab1rd t1_itvo09y wrote

Just a question, what do you gain from arguing with me about this? Like, why does it matter? Why must my statement about Roanoke (and yes, I mean Roanoke, not Blacksburg) vs. Richmond be criticized because I... go between both towns and didn't specify the ins and outs of my exact living situation? 🤦‍♂️

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[deleted] t1_itstwr2 wrote

[deleted]

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dogwithab1rd t1_itt2z3a wrote

A friend of mine was living in a rental that was "affordable", but didn't have running water for several weeks. Are those really the conditions you think we deserve to live in? It's not a matter of "disliking" it, it's a matter of it being literally hazardous. Which is its' own problem, honestly. And regardless, we deserve to like where we fucking live.

And if you really didn't "care about my hometown", would you be in the Richmond subreddit getting downvoted to the 7th level of hell for being a landlord bootlicker?

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[deleted] t1_ituex2o wrote

[deleted]

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tastysnake667 t1_itugjkr wrote

Uh that’s like $3500 a month , I’m sure that’s not true at all.

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crack_spirit_animal t1_ituh2a4 wrote

https://www.google.com/amp/s/www.cnbc.com/amp/2021/07/14/full-time-minimum-wage-workers-cant-afford-rent-anywhere-in-the-us.html

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tastysnake667 t1_ituh7gh wrote

Said nothing about two people. But

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forgottenyears32 t1_itskceq wrote

sorry but if you’re unironically simping for fucking landlords you probably should re-evaluate that stance. Holy shit what a moronic take

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[deleted] t1_itstds1 wrote

[deleted]

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SassySnippy t1_ittmfnf wrote

You said the fucking meme, holy shit. How dare people want their basic needs to be affordable.

Landlords produce nothing for a society and are parasites. You can gloat all you want that it's "basic economics", but you gotta realize that you still makes you a terrible person and people will justifiably hate you for it

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ttd_76 t1_itvwb8d wrote

I don't hate them for being right.

We need way more landlords, not less.

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redditSupportHatesMe t1_itt23fv wrote

Tell me you don't understand how anti trust works without telling me you don't understand how anti trust works.

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GMUcovidta t1_its5wy2 wrote

There have been a few cases like this in recent years where people object to price sharing via third party data firms, Agristats comes to mind

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ttd_76 t1_itspuib wrote

Yeah, we'll be seeing more and more lawsuits like this.

In this case, I think the massive legal problem RealPage is facing is that allegedly if your rent price deviated from their suggested price, they would call you and pressure you to change it.

At that point, you are effectively in communication with other companies, just with RealPage as an intermediary.

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rvafun100 t1_its9st7 wrote

Greystar might as well be called Death Star. Go to just about any city on the East Coast and you’ll see their ugly 5 over 1s

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chairmanbrando t1_itshtcm wrote

Five-over-ones were supposed to keep housing options affordable...

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goodsam2 t1_itsqoz0 wrote

They are putting up a lot of housing especially in more urban areas but we are talking about a 40 supply shortfall of housing especially as millennials are a relatively large cohort age into place.

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jwillsrva t1_itujplp wrote

I’m not familiar with this term- what’s a 5 over 1?

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thorlord16 t1_itum5a9 wrote

It refers to wood frame construction over a concrete slab. Basically, any of the new trendy apartments in any city across the nation being put up are 5 over 1s.

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jwillsrva t1_ituojvy wrote

Gotcha, thanks. I'll have to look into why it's called that.

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thorlord16 t1_itupraj wrote

It comes from building codes; Type 'V' construction refers to structures framed with combustible timber, Type 'I' is a non-combustible podium or slab. Wiki

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mediumjuju t1_ituoztm wrote

Believe it’s five stories of wood construction over one level of concrete.

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The_GOATest1 t1_itujy30 wrote

Really we should remove them and put SFHs there with more character because that would surely reduce housing costs

−1

rvafun100 t1_itv4l19 wrote

Or limit the amount of units a corporation can own to prevent oligopolies from colluding on price.

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plummbob t1_itywcrd wrote

Or legalize more apartments so the market is larger and prevent oligopolies all together.

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rvafun100 t1_itzw2lo wrote

Talk a walk around some time, apartments are not illegal…going up all over town

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plummbob t1_itzyar1 wrote

they are illegal in the vast vast majority of developable area

of course, so are townhomes, duplexs, 4plexes, village cottages, dorm style housing, etc... ya know, the missing middle.

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inudd t1_itsxyui wrote

Reminder to join the Richmond Tenants Union

We have power in numbers!

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Fit-Order-9468 t1_itvzv4x wrote

Their proposal, as I saw referenced in their most recent news item, is quite bad. Rent control discourages migration. This only makes the intense segregation in RVA worse by freezing out new tenants.

Their apparent opposition to development is quite confusing in this regard as well; to desegregate Monument avenue to match the diversity of the city as a whole would require the POC population to more than double. There's not enough housing to do that without displacement.

−2

opienandm t1_itxmanr wrote

I can see the downvotes coming, and I understand what you’re saying. But it’s a tough sell to convince the “hungry” that tactics aligned with “eating the rich” are not going to work.

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Fit-Order-9468 t1_itxmxae wrote

It’s not clear to me how the rich are being eaten. What the union is saying sounds a lot like what wealthy homeowners want but with a socialist spin.

I care about reality but unfortunately most people don’t. The union needs to make a decision; are they about improving the lives of renters or are they about rhetoric people want to hear. It seems like the latter in which case they are, unfortunately, useless.

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93devil t1_itsfftk wrote

Collusion is the proper term.

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suz_gee t1_itsjwiq wrote

This is huge but I don’t understand what it means? Like, even if it’s ruled in favor of the tenants….nobody is going to roll back rent?

I feel like the jump in rental pricing is just here to stay regardless of the outcome of this case… Would best case scenario just stagnant rents at current rates? Or is this wild annual percentage jump here to stay with or without an algorithm because now people see it can be done?

When pricing rentals, the game landlords play is generally “go as high as I possibly can in the current market,” especially with these huge companies, I’m really struggling to understand if this case would actually change anything, other then get a bunch of tenants a single check in the mail in damages?

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systematical t1_itsmquf wrote

There are rules in place: https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing

I think this is a hard one to prove. Plus, our country hasn't brought an anti-trust suit in decades that I am aware of because the teeth of corruption are sunk in deep.

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suz_gee t1_itsn6ki wrote

I edited my comment to make my musings more clear…mostly by adding line breaks.

What I’m wondering isn’t if they’ll win - but if a win or loss would (could) actually change anything at this point?

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systematical t1_itsny5s wrote

What we need is for corrupt white collar folks to start getting that 1990s style crime bill treatment. Will it make a difference? I don't know, but I'll enjoy it.

Edit: Hi neighbor!

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Matt5sean3 t1_itsmsv0 wrote

One would hope that the landlords are barred from further collusion resulting in a more competitive rental market in which landlords have to lower prices to be competitive.

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suz_gee t1_itsncxx wrote

Having worked in property management before, I’ve only ever seen companies try to go as high as possible with rents… If places are renting at these high prices, I can’t imagine anyone rolling back rents to pre-2020 levels… I think all the damage is done.

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Matt5sean3 t1_itspewa wrote

That sort of puts the lie to the whole idea that it's a meaningfully competitive market then. As new housing is built that existing overpriced housing should have to drop prices or at least not increase as much or else sit empty.

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plummbob t1_ituog0y wrote

> barred from further collusion resulting in a more competitive rental market in which landlords have to lower prices to be competitive.

​

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rents are set by the marginal renter. so if that renter has a high willingness-to-pay, existing landlords have no incentive to lower prices.

​

and because its hard to build in the city, and demand is ever increasing, renters will face higher and higher prices.

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Matt5sean3 t1_itv6by6 wrote

Nonetheless, despite difficulties, new housing does get built in the city (but yes, likely not at the needed rate). This should still mean there's an improvement over what would happen otherwise.

However, if a person did want to push faster creation of new housing as a solution to housing affordability, preventing price fixing is a definite pre-requisite to that working as a solution.

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plummbob t1_itv876z wrote

Entry of new is the solution to any kind of price fixing. Like, if a subset of the market sets their price above the equilibrium price, then of course homes will get built because the inputs to housing construction have not changed. Price fixing literally only works if there are large barriers to entry, and for housing, the only actual barrier is zoning (you could build a code-compliant home entirely from stuff bought at big box store).

​

Buts it not even that -- its that these firms are able to raise prices because they were underestimating people's willingness to pay. So that means that upzoning (ie legalizing housing more broadly) would be even more effective than we would expect because it means there is a larger gap between the cost of building and demand (in other words, the zoning tax/deadweight loss is bigger than we think).

​

The city legalizes housing on the extremes, but little is done for starter size homes. By way of example, prices in my neighborhood have grown but the supply hasn't despite an abundance of lot space (approx 3x the space consumed by housing). And its not because its impossible to build 700sqft homes due to lack of supplies/labor. Its because the city fixed the quantity of housing.

​

​

I just find it baffling that the "just legalize more housing" as a solution to a housing shortage is the most controversial take.

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ttd_76 t1_itwgbe3 wrote

>I just find it baffling that the "just legalize more housing" as a solution to a housing shortage is the most controversial take.

Because the problem is more complicated than that. Ultimately, yes there needs to be more housing but there is not one simple path to get there.

No matter what you build someone will complain. If you build a small apartment unit, people will complain it's not a high rise. If you build a high rise, people will complain about corporate landlords.

If we issue vouchers or reserve some units for. affordable housing, people complain. If it has too much parking, people complain. If it's not in the city, people complain about car culture. If you upzone an area and the wrong business moves in, people complain.

No one actually wants more housing in a generic sense. They just want more housing of the kind they personally want, at a price that is affordable for them. And if they cannot get it...they'd rather have no housing.

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plummbob t1_itwhlxy wrote

The economic problem is easy to solve ... when there is a legally mandated shortage, just lift the mandate. Vouchers for people below the market.

Why can't ppl just be more utilitarian :(

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ttd_76 t1_itvuapt wrote

>This should still mean there's an improvement over what would happen otherwise.

Yes, but in this case it most likely means prices would be going up even more without that construction. So new construction helps, but it's not going to slow rent increases much.

>However, if a person did want to push faster creation of new housing as a solution to housing affordability, preventing price fixing is a definite pre-requisite to that working as a solution.

Increasing new housing is the solution to price fixing. The more landlords in the market, and the more options available, the harder it is to control supply.

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BurkeyTurger t1_itshf1j wrote

I'll be curious as to where this goes. I know the software is much fancier than a web scraper but it isn't hard to see what people are charging these days and adjust your price accordingly.

IMO the bigger issues are lack of supply and existing supply being gobbled up and consolidated by large companies.

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terenn_nash t1_ituqyi0 wrote

>but it isn't hard to see what people are charging these days and adjust your price accordingly.

yes but normally you are trying to acquire tenants. how do you get more renters? provide more value either through amenities, price or both. then competing entities do the same and lower prices or give you more bang for your buck. the last thing you want to do is raise prices when no one else is because you will inevitably lose tenants.

but what if there were a centralized entity that scraped all the data, inflated prices X%, then went around pressuring people to increase their rents to match "market" data and annoyed the hell out of anyone who didnt or tried to compete and lower their rent while telling them they are doing the same to their competitors so dont worry about competition.

if that happened you could raise rents dramatically in a short time frame with zero fear because no one else is going to undercut you.

thats called a cartel. theres a very famous one that you probably have heard of, they collude to control the supply and price of oil instead of letting competition exist, OPEC.

the bigger issues you alluded to with supply being gobbled up and consolidated under large companies? thats what enabled RealPage to pull this off. i would be willing to bet RealPage is backed by one of these larger companies that has gobbled up supply and this was their way of driving up the price rapidly.

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BurkeyTurger t1_itv382a wrote

Specifically in Richmond we're in the middle of a historically low vacancy rate for apartments so places can charge whatever they want almost since we're still cheap compared to other metros.

The software isn't helping anything but consolidation and lack of supply are the root issues IMO. When one company owns 10000 units instead of 50 companies owning 200 units each they can easily manipulate prices higher and take the hit of some of them staying vacant longer if the rest of their portfolio is able to glean the higher rent. Whereas smaller entities can't support as high of vacancy rates and are more incentivized to be competitive.

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plummbob t1_ityxpfn wrote

So it's a cartel because ppl are using the same database for prices? If I use zillow to adjust my price of home to rent, am I forming a cartel with all other landlords in the area?

1

Fit-Order-9468 t1_itssdrw wrote

The hostility to zoning being a major source of this problem is very confusing. More than one thing can be true at a time.

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TGhost21 t1_itsr0y5 wrote

Doesn’t matter. The law doesn’t apply to the wealthy.

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lattecapitalism t1_itvm77v wrote

Big fan of the heavily downvote comments essentially being “Well the free market would…”. It’s abundantly obvious they didn’t even read any of the links, just came here to shill for capitalism.

It sucks feeling like I participate in the gambit of raising rent prices, there really aren’t that many options as far as 1BD apartments and as a result I live in a 5/1 that’s significantly over priced. You’d be hard pressed to find anything in J Ward/Arts District for less that $1400 that isn’t run down.

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plummbob t1_ityx9g0 wrote

>here's a obviously predictable consequence of the housing shortage >let's legalize more housing to fix the shortage, and by extension the other problem >downvoted to oblivion

Fun fact, home apartments, communal living or dorm style apartments or 4plexes are illegal to build in most of the city.

2

Hayek66 t1_ittejcz wrote

Richmond has the authority to institute a land value tax. It’s time we do so

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Asterion7 t1_ituxqlw wrote

Woah. Corporations colluding to rip off the American people and fix prices? Well I never.

3

Mr_Fury t1_itzusjj wrote

Start offering lower, don't pay asking price. Look for rentals 6+months before you have to move out. (Look for sublets.)

1

Moxy-Proxy t1_ituz0k8 wrote

Do you have any idea how little people in Richmond pay compared to literally every other city is us?

−2

lattecapitalism t1_itvl1aw wrote

Just because everywhere else sucks doesn’t mean Richmond isn’t bad. Sure a 1BD in New York is $4000 that doesn’t make $1600 here any less shitty.

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plummbob t1_its44ju wrote

Wouldn't be a big deal if zoning was more flexible.

−36

toocapak t1_its4jbt wrote

Price setting could be an issue at such a massive scale — if you have one property management group in charge of 1000 units in one given area, then you could very easily manipulate pricing through the comparitive sales/rent method.

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Fit-Order-9468 t1_itsiltf wrote

The effect of zoning is a legally enforced price fixing scheme among homeowners. This is explicit; just talk to homeowners and they’ll tell you.

Landlords are essentially free riding on the policies that ordinary homeowners, who’ve won the lottery for the American dream, created.

1

plummbob t1_its4p7l wrote

Only if there are high barriers to entry for other companies/landlords.

−11

toocapak t1_its4dya wrote

The crux of the issue is price setting. Not software or an algorithm. All that talk is ignoring the simple, bigger issue.

Real Estate professionals use algorithms and software all day long to help them with pricing/pricing adjustments based off location/size/condition.

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GMUcovidta t1_its6ab7 wrote

All large companies across industries use algorithms and software to help determine price increases.

5

RVAMS t1_itsb9ho wrote

Yeah but generally three competing companies in the same market aren't using the same algorithm. An algorithm that one company uses, that feeds of the data that it set for another company will artificially inflate prices like we're seeing here. That is price fixing.

5

ttd_76 t1_ittcuvz wrote

It's if the price setting is a result of stifling of competition.

The way collusion distorts free markets is if the colluding companies have enough clout to gang up and stop those that want to undercut them.

If you decide to charge $10k for your apartment, and I see that you are able to rent it and I then raise my rent to $10k, that's not an efficiency problem.

If you decide to charge $10k for your apartment and I decide that you are an idiot and I will take your customers by undercutting your prices, but then you are able to start hassling my tenants or making frivolous charges about alleged violations then it is an issue.

That's the problem. Not that companies cooperate in some fashion against consumers, but that they cooperate in some fashion against potential competitors... which then obviously creates higher prices and hurts consumers.

3

semihat t1_itsepl4 wrote

If the software set rents too high, apartment vacancies would increase but that hasn't been the case. Vacancies have come down, so you could argue rents are too low.

−52

Antique-Zucchini3250 t1_itsgmye wrote

hm it's almost as if housing doesn't perfectly follow economics 101 theory, maybe because people are willing to do almost anything to not be homeless.

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GMUcovidta t1_itsjlbp wrote

Anyone that passed economics 101 is familiar with necessities and related pricing elasticity. The fact people are willing to spend a lot to avoid homelessness is covered in entry level Econ classes and a key part of many more advanced economic theories.

The person you're replying to is just clueless and doesn't understand how leases work.

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semihat t1_itt30a4 wrote

the alternative to renting an apartment is not necessarily to go homeless. 1. you could buy a home 2. you could rent a single family home 3. you could move in with family 4. you could move into a home or apartment with roommates.

−23

bruxalle t1_itueip2 wrote

Yeah, you could just win the lottery dummy!

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okcknight t1_itsb590 wrote

From who’s perspective is the rent high? I’ve always thought Richmond was Virginia’s best kept secret, with a laughably low rent for a capitol city — it used to be you could rent an apartment for $800 easy here. But the cats out of the bag, and wealthy people have been moving here in droves, even before covid. Now you have remote work which compounds the problem. I don’t know what the solution is, but even if you got rid of any corruption, I doubt we’d see rents go anywhere near what they used to be.

ITT: children

−67

fuqqboi_throwaway t1_itseqfk wrote

The issue is when Landlords keep increasing rent every year, slowly pushing tenants out and then skyrocketing the price once they’re gone. At a certain point it feels like greed is coming too far into play when these rent spikes aren’t being matched with any wage increases or even improvements to Richmond’s schools, infrastructure, etc.

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Detlionsfan1188 t1_itsjqds wrote

You will be waiting a lifetime for Richmond city schools to get better. Hell will freeze before that ever happens.

15

sirensinger17 t1_itslcws wrote

Can confirm. I bought a house last month cause my landlord raised my rent by 30% and would have probably done it again next year. I'm well aware of how lucky I am

2

plummbob t1_ityxxyl wrote

That's because rental prices are based on people's willingness to pay, not specifically tied to any given wage. Hell, if anything real income would fall hard if rva actually had really good sxhools, roads, etc.

Bad schools and shit infrastructure put downward pressure on rents. Good schools and public amenities raise rental prices.

1

fuqqboi_throwaway t1_itzb27f wrote

But those “people” who are willing to pay arent people actually from Richmond or even living in it, it now consist of opportunistic slum lords and the parents of VCU and UofR kids Chadley and Olivia in NoVA who make 300k+ a year and will pay whatever they need for off-campus housing at universities that “can’t keep up” with on-campus student demand. $1800 rent seems perfectly reasonable when they’re paying triple that in Nova, even when the same RVA property was half that price 2 years before.

There’s clearly been a huge onset of gentrification fueled by greed and opportunity in the last few years...and when that isn’t matched with meaningful improvements to the life of the people that actually live in the area it’s affecting, it should be noted as an issue. Anyone that’s lived in Richmond a meaningful amount of time i.e 4+ years can see what’s happening to the city

1

plummbob t1_itzeiq3 wrote

>But those “people” who are willing to pay arent people actually from Richmond

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nativism is gross.

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>There’s clearly been a huge onset of gentrification fueled by greed and opportunity in the last few years

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people want to live near urban amenities. the city makes it hard to build housing. so the price goes up. moralizing about greed is stupid because even if people were super altruistic, the price would still go up by the same amount because people would still be bidding the rents.

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>and when that isn’t matched with meaningful improvements to the life of the people that actually live in the area it’s affecting, it should be noted as an issue.

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of course its an issue. we have this huge influx in investment, but without a corresponding output in housing. and its not because we lack a supply of wood, copper, drywall and concrete.

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>Anyone that’s lived in Richmond a meaningful amount of time i.e 4+ years can see what’s happening to the city

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been here about a decade. houses in my neighborhood have nearly doubled in price, but the city has kept the supply of homes capped at the same amount since its inception even though everybody has enough space to build 3 houses per lot, or a 4plex in every backyard, or each lot is big enough for townhome/shotgun style, or literally anything in the spectrum of the missing middle.

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the problem is zoning. there is no reason why my neighborhood should have supply of housing fixed by policy when the prices are telling people to build.

2

RVAMS t1_itu49nc wrote

It’s nationwide. Compare rent costs to wages and it’s at a more imbalanced level than ever. It was 800 bucks which was pretty much normal for a lot of places that aren’t New York, LA, or San Francisco. You could get an apartment for 800 in Nashville, or Denver, or other similar, mid sized city. Now you can’t get one in any metro in the county. Rent is too high or wages are too low across the board. From an objective perspective.

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[deleted] t1_its41j3 wrote

[deleted]

−152

RVAMS t1_its4l03 wrote

This isn't supply and demand. This goes against the concept of a free market economy by getting together with competitors and raising prices together. It's a practice called price-fixing, a textbook example of it, and it is against the law. This is artificially raising the cost of rent between competing businesses on a basic human necessity, knowing that small landlords will raise their prices to match, and nobody will have a choice but to bend over. Take an econ 101 class before you defend stupid, anti-consumer shit like this.

108

ttd_76 t1_itsmd2r wrote

It's not a textbook example of price fixing so long as there is no agreement between competitors.

More information makes the market more efficient. If prices are going up it means rent was artificially low.

And what you should have learned in Econ 101 was that even if these businesses were actually colluding on pricing, it's efficient. They can get together and keep prices high, and in the sane way purchasers can get together and boycott products.

−18

RVAMS t1_itsrkke wrote

Bro you’re literally calling price fixing, which is absolutely anti consumerist and anti free market as being “efficient”. You can’t fucking boycott the entire local housing market that gets raised with the tides of several large companies inflating prices, it’s a basic human necessity. The reason it is illegal is because it is efficient for the companies who do it, not the consumer.. And it is textbook, you don’t have to be in some official collusion handshake agreement for it to be price fixing, which is why they’re getting sued.

If I own 15% of the tomatoes and you own 15% of the tomatoes, and we run the same computer program that sets the price of our tomatoes. And they both say we should set them 10% above market value based on trends. Now a third of the tomatoes available to all people are priced slightly higher than they should be. We sell less tomatoes in the short term, but the other tomato peddlers notice they are able to sell their tomatoes at better margins than they were previously, raising the cost of tomatoes. Now our little algorithm raises that cost of tomatoes yet again.

Now imagine that scenario, but there is a shortage of tomatoes, and it’s the only thing that anyone is allowed to eat. That is what is happening here.

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ttd_76 t1_itsvifu wrote

The other vendors don't have to raise the price of tomatoes. They can keep their prices the same and just sell a lot more tomatoes by taking away your customers.

If the entire tomato industry raises prices and people are willing to pay those prices, then those prices are not "artificially high." They're an indication that the previous prices were non-efficiently low and we were overconsuming tomatoes.

In a perfectly competitive market, existing vendors colluding is not inefficient. One vendor having a monopoly isn't even inefficient.

The problem is that those situations probably shouldn't happen in a perfect market. The real market failure is with barriers to entry or something else, not the pricing algorithm.

>Now imagine that scenario, but there is a shortage of tomatoes, and it’s the only thing that anyone is allowed to eat.

This is pointing at the fact that housing should be a public good. Which I agree with. But again the problem is not a pricing algorithm. It's that we value equity more than efficiency for this good and therefore it should not be a private market in the first place.

−11

RVAMS t1_itsypir wrote

Except when there is a finite anount of tomatoes and it isn’t a consumable item. It is a commodity that you maintain and can fluctuate the pricing of. You don’t sell more tomatoes, you sell the same tomatoes you have always had for an increased price because people have to buy them, and there is no alternative.

Does the entire problem stem from a computer algorithm? No, nobody is making that argument. But price fixing can exacerbate an already fucked up economic system, which is what is happening.

The fact that you’re arguing there isn’t a problem with price fixing or monopolies is frankly fucking hilarious. Or waxing philosophical about a theoretical and completely inapplicable ‘perfect market’ to the benefit to nobody in this conversation really is some libertarian big brain play.

9

PhuncleSam t1_itvykct wrote

You can’t just boycott having a place to sleep

1

plummbob t1_its5i2q wrote

Supply is far too inelastic than building costs justify. If a portion of the market is artificially raising prices, that's an incentive for others to enter.

If they can't, the problem is fundamentally local policy.

−70

RVAMS t1_its7ksp wrote

Local policy in every single locale at once across the county, wow that is really something. People really out here defending price fixing. I would love to hear your take on the telecom monopolies and how they're actually good for the consumer.

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plummbob t1_its7rwi wrote

Bad zoning is ubiquitous. Missing middle is a national problem as a result.

−48

RVAMS t1_its8azo wrote

Bad zoning is ubiquitous, not corporate greed consolidating land to make feudalism 2.0. I didn't know that every county in the country had their zoning boards call each other and decided they would all align their values. Quite the project.

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Fit-Order-9468 t1_itsmoji wrote

Right. It’s called segregation and has been around for a long time.

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plummbob t1_its8k07 wrote

Zoning is actually fairly consistent across the country and has been since Euclid.

−27

RVAMS t1_its9g1q wrote

The fucking problem is real estate investors snapping up properties to resell or develop for profit. Then costs of material go up so they sit on empty property until they can maximize profit, which is an affordance that small scale developers don't have - which is why it hasn't been a problem on this scale before. Blame it on zoning, but Euclid zoning has been around for 100 years and this is magically the first time we are facing this problem at this scale. Ignoring that different localities have different processes for changing zoning, permits, and several other variables which doesn't properly explain why this is happening all at once everywhere.

The problem is huge companies gobbling up everything and waiting to maximize profit. We have a ton of fucking land that can easily be developed but not without their say so because the cost of lumber and other materials hit an all time high, and the cost of weathering the storm makes more sense to them than developing and selling now and making less of a profit.

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plummbob t1_its9y8a wrote

Most of the usable land in the city is zoned single use, low density.

Building costs aren't the barrier to entry. 4plexes, townhouses, cottage or village styles are all viable, but the zonig code only allows them in a few select areas.

Investment is obviously not the problem.

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RVAMS t1_itsa6gs wrote

The city or every single metro area in the country?

The 100 largest landowners increasing their stake by 50% every ten years surely has nothing to do with this problem. Surely the ultra wealthy and multinational developers working in tandem have nothing to do with this issue so I guess I'll just blame it on checks notes zoning policy in every county in the country.

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rvafun100 t1_itsa1el wrote

Zoning is not the problem, such a weak stance

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plummbob t1_itsa7np wrote

It creates shortages that building costs don't justify.

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rvafun100 t1_itsagi7 wrote

It’s a common scapegoat for those like you who think the market is free

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plummbob t1_itsao3g wrote

We have a housing shortage not because we lack wood or copper, but because it's literally illegal to add more homes to the lots that exist.

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RVAMS t1_itsaygj wrote

So wait is it because it's illegal or the cost of development is too high I am getting confused now.

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plummbob t1_itsbffr wrote

Restrictive zoning makes most development illegal, and creates costly barriers to the development that does take place.... ie only allowing large scale apartment projects but keeping townhouses illegal

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rvafun100 t1_itsft5g wrote

Take a walk outside. Townhouses are illegal? LOL, walk around Hardywood…then over to Maggie Walker…plenty of 500k and up townhouses being built

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Karmasmatik t1_itskq32 wrote

Explain why the exact same problem is playing out in Houston, TX where there is famously no zoning whatsoever.

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Fit-Order-9468 t1_itsmeer wrote

Deed restrictions. They hide exclusionary zoning through HOAs.

Besides, for a city that large it’s comparable in price to RVA. Could be a lot worse.

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C14R16 t1_itsg448 wrote

Not in my backyard you won't! /s

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Remerez t1_its6hyi wrote

If the average worker can't even live in the city they work, there is a problem.

54

cogitator_tertius OP t1_its4yyd wrote

A couple points:

  1. We don't have visibility into what the algorithm is designed to do and how it weights variables. So we can't say it is purely supply and demand.
  2. By working together to control pricing like this, these companies are applying levers to the housing market. The free market model only works until someone starts messing with it. Ceteris paribus - all other things being equal - is a key assumption.
  3. I'll just say, if it wasn't sketchy, why hide it?
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maybehomebuyeriguess t1_its5bib wrote

We don't have visibility into a private company's market analysis, therefore it's immoral and definitely illegal.

"The free market only works until someone starts messing with it" you mean like through regulation? Wait, no, by 'messing with the free market' you just mean an aspect of the free market that you don't like.

−51

LostDefectivePearl t1_itubwg7 wrote

Who was your Econ professor? I’d like to email them and ask if they failed to teach you supply and demand, if you failed their class, or if you’re a stupid cunt who never took econ

5