Submitted by cogitator_tertius t3_ydg7ac in rva
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?
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.
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?
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!
RefrigeratorRater t1_itt12ls wrote
What would change is that there would be less price fixing going forward
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.
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.
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.
Mr_Boneman t1_itt4rvq wrote
ratchet effect.
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.
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and because its hard to build in the city, and demand is ever increasing, renters will face higher and higher prices.
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.
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).
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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).
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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.
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I just find it baffling that the "just legalize more housing" as a solution to a housing shortage is the most controversial take.
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.
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 :(
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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