Profits are fine, excessive profits at the cost of people who need housing are not. There is no silver bullet, but increasing supply along with strong regulation to protect renters is welcome vs them being cattle to be squeezed by for profit entities. Human rights are a thing, there is no right to profit.
> The six largest publicly traded apartment companies in the U.S. — all of which are linked to an alleged rental price-fixing scandal — experienced profit increases during the first three months of the year, according to an analysis from left-leaning watchdog group Accountable US exclusively shared with The Hill.
> In the analysis, the companies earned a combined $300 million in profit during the first quarter of the year, in part, due to rent increases.
Lots of profit to squeeze out with regulation, based on the evidence. The Vienna model is a proven model if for profit enterprises walk away from housing.
The phrase "protect renters" is often used as a dogwhistle for price controls. For example, rent control and affordable housing mandates that require a certain % of units to be rented at below market rates. Can you elaborate on what exactly you're referring to here?
This would be an unproductive use of time. It is very clear you are pro "no regulation" around housing (based on your thread comments, "just build more"), so a heated argument with the potential for the subthread to be detached by dang does none of us any good. I'm not here to change your belief system, and to attempt to do so would provide no meaningful impact to macro outcomes.
All I'm asking you to do is list the specific laws or regulation you're referring to here when you write about the need to "protect renters". I don't know if we agree or disagree, because you haven't actually stated what your beliefs are.
I definitely support regulations around housing: housind needs to be safe (fire exits, sprinklers, etc.). Landlords can't engage in deceptive practices, like putting up ads for one unit and giving the tenant a different one. Units should be promptly repaired. Landlords shouldn't discriminate on the basis of protected class. I could go on.
Dynamic price control of rents to prevent them from accelerating beyond what wages can support (existing tenants win vs potential new market entrants, them the breaks when supply is catching up to demand or cannot meet demand), tenant rights with strong local regulatory oversight, government incentives to encourage a diverse ecosystem of suppliers bringing new supply onto the market based on forecasted market demand (cost of capital, regulatory streamlining support, construction labor pipeline, etc), upzoning whenever possible to encourage density as much as reasonable.
Supplier diversity is needed to prevent use of market power to restrict new supply coming online to hold rents higher than they otherwise would be (strong evidence homebuilders are doing this current state, restricting supply to juice profitability). The rest should be self explanatory. As you said, there is no silver bullet; it is various policy measures working in concert to attempt to arrive at a desired outcome. I am not anti profits, I am anti "gouge the human for basic needs for profits."
TLDR Some profits? Okay. Too much profit? Not okay. People living in constant fear of not having a home? Not okay. Build, build, build.
(am a landlord myself, do not raise rents unless actual costs go up, reduce rents when needed by tenants, keep my profits reasonable [~%6-%10], usually no more than $100/month/door)
How many economics studies, from all schools of economic thought, across 100 years of research need to prove that price controls don't work before people start accepting that fact?
I mean dynamic price control works in most French cities. The exception is Paris, but they tried a static price control for no reason (also, non-market housing supply is diminishing, which is a bad thing. Capitals with 30 to 40% non-market housing are doing extremely well usually)
> prevent them from accelerating beyond what wages can support
In practice what does this mean? If landlords raise rents beyond what people can pay... doesn't that mean they lose tenants? If they do not lose tenants, then by definition doesn't it mean they have not raised rents beyond what people can pay?
Okay, so I was right: "protect renters" was indeed referring to price controls. Price controls coupled with what sounds like blatantly nativist policy:
> Dynamic price control of rents to prevent them from accelerating beyond what wages can support (existing tenants win vs potential new market entrants...
Can you elaborate on what you mean by "existing tenants win vs potential new market entrants"? Does this mean that landlords must rent at lower rates to someone who has lived in SF for some time, versus an immigrant that is willing to pay higher rents?
I think GP is pretty clearly implying more akin to Prop 13 but for renters (i.e. Prop 13 locks in increase in property taxes to 2% a year), this policy would do something similar for rent.
It benefits existing renters because new entrants (new renters) would have to pay market price, but existing renters might be behind market rent if market rents are increasing too quickly. Same way that Prop 13 works.
Dynamic in the sense that it's not fixed at 2% but tied to some sort of variable index (San Diego for example does CPI + 5% with a hard cap of 10% YoY increase I believe)
> I think GP is pretty clearly implying more akin to Prop 13 but for renters (i.e. Prop 13 locks in increase in property taxes to 2% a year), this policy would do something similar for rent.
It's called rent control. That's literally describing the existing rent control policies in SF: rent is fixes save for an extremely minor increase around 2%. Allowing a fixed price increase is still a form of price controls.
I really want the previous comment to elaborate on this:
> existing tenants win vs potential new market entrants
> For example, rent control and affordable housing mandates that require a certain % of units to be rented at below market rates.
The issue that we have here - market rates controlled by RealPage. Since everyone uses RealPage, in terms of price for renters it's essentially the same as if every building was owned by the same company.
I'm appalled how long it took for this lawsuit to be filed. We knew about this price fixing for quite some time.
> The company has reported that it provides these services to 10 percent of the rental market in San Francisco.
RealPage doesn't have nearly enough market share to engage in price-fixing. If it tried, its units would stay vacant as other renters flock to the 90% of units that aren't using RealPage.
Sure, but what matters is what percentage of the apartments with vacancies RealPage controls. Many apartments don't turn over year-to-year, so that 10 percent might or might not be misleading.
strong regulation increases costs (see all the permits and surveys required in SF).
What are "excessive profits"? 10%? 15%? 25%?
> experienced profit increases during the first three months of the year
Does this even mean anything? This could mean their vacancy rate decreased and thus their business is more profitable. I don't see the issue with companies reducing vacancies and providing more housing to more people.
I cannot say, but experts can, and suggest to legislators and regulators implementation details. To operate a business in a jurisdiction is a privilege, not an entitlement.
I'd love to see the data on this. Usually when you increase construction costs, via additional regulation, you're going to increase the price of rent/sale.
What expert thinks increasing costs will lower prices?
It's the other way around. Regulation around pricing forces housing providers to provide housing within a constrained cost model (land + materials + labor + cost of capital + permitting/AHJ requirements [regulation]). If they cannot meet the market (or choose not to, for whatever reason), public housing is an option, with muni bonds issued to finance construction. This removes the profit component, which a for profit enterprise needs, but public housing does not.
where does the public housing come from? WA and CA can't seem to figure out how to build public housing. In WA, the best I've seen is the gov buying hotels and having the hotel sit empty for years [0].
If regulations make it impossible to build housing and public housing has the same regulations, who is paying that bill? The existing residents via sales and property taxes?
you can google construction costs in sf. how does regulations reduce any of those numbers?
Washington has at least done a better job than San Francisco. Seattle has built over twice (IIRC three) times as many homes per-capita than SF over the last decade, despite lower population. The fact that rent control is banned statewide has a big role to play there.
It's not "despite" lower population. The thing that drives the costs up isn't evil landlords or the dreaded "profit motive". It's just demand massively outstripping supply, and high wages.
If you can earn 25% percent in profits in the current environment then it is a clear indication of an inefficient market - a market that needs to be regulated in order to create efficiency (like in this case as with many other cases: remove monopolistic behavior).
While it is problematic if you can't derive profits from productive activities it is also problematic when entities derive unsustainable profits - also for the party deriving the profits.
If there is not a bit middle class to consume products, then there will not be be a market to supply products to.
Targeting profit rarely helps. The big players can afford the financial engineers to make the profits negligible from an accounting perspective. Likely funneled into growth. The small players cannot, so you put them in a situation where selling to a big player is rational. And the oligopoly grows.
Excessive profits are actually the catalyst for competition. THe cycle of capitalism and free markets looks like this: earn excess profits -> people build more supply -> prices come down and excess profits dry up -> people stop building -> earn excess profits. When you fix the 'prices come down and excess profits dry up' all you get is people stop building.
That works in a well functioning, liquid market. If there are barriers to entry for new competitors (like regulatory hurdles, or zoning), this free-market theory falls flat on its face.
I support price regulation when called for. Your hyperbole is...not congruent with reality, considering the incredible agriculture subsidies provided and automobile tariffs.
> Something real is going on. In individual markets, CEOs have been bragging publicly that they are restraining production to increase prices. Profit margins in the food industry jumped during Covid and haven’t come back down. Or take rent. There’s a company called RealPage that works with the biggest corporate landlords to hold apartments empty so they can increase prices, which jumped up 11% in 2022. There’s some evidence of conspiracy around pricing in virtually every industry. Turkey, poultry, and pork. Frozen french fries. PVC pipe. Anesthesiology. Oil. Ammunition. Pharmaceuticals. K-Pop. Credit bureaus and FICO, Verisign, industrial gasses, architectural software, locks, entertainment data. Homebuilders. Garden chemicals. Defense and aerospace. Ticketing. Estate Sales. Gaming. Drug wholesaling. Work ID information. Seeds and chemicals.
Laws to crack down on this behavior has popular support, so I won't spend additional time defending the idea in this forum, as it is unnecessary.
> The most popular policies are calling on all states to suspend taxes on groceries (68% selected), cracking down on overcharging by hospitals (66%), starting a congressional committee to hold hearings on and investigate price gouging and overcharging by corporations (63%), requiring public utilities to cut rates for electricity (63%), reducing the deficit by cutting spending (62%), and prosecuting price gougers (61%).
When is price regulation ever called for? The only times I can think of are when there is a monopoly, oligopoly, monopsony, oligopsony or significant externalities.
> Laws to crack down on this behavior has popular support, so I won't spend additional time defending the idea in this forum
The popularity of a proposal has very little to do with its appropriateness.
>I support price regulation when called for. Your hyperbole is...not congruent with reality, considering the incredible agriculture subsidies provided and automobile tariffs.
The outrageous profiteering in food and groceries is not with the hyper-subsidized agriculture industry that grows food and raises livestock, but up the supply chain in the middle-men who buy this to process and package it (especially meatpacking). Consumers, farmers, and grocers would all be served if the monopolies that absorb massive food profits were busted.
> Something real is going on. In individual markets, CEOs have been bragging publicly that they are restraining production to increase prices. Profit margins in the food industry jumped during Covid and haven’t come back down. Or take rent. There’s a company called RealPage that works with the biggest corporate landlords to hold apartments empty so they can increase prices, which jumped up 11% in 2022. There’s some evidence of conspiracy around pricing in virtually every industry. Turkey, poultry, and pork. Frozen french fries. PVC pipe. Anesthesiology. Oil. Ammunition. Pharmaceuticals. K-Pop. Credit bureaus and FICO, Verisign, industrial gasses, architectural software, locks, entertainment data. Homebuilders. Garden chemicals. Defense and aerospace. Ticketing. Estate Sales. Gaming. Drug wholesaling. Work ID information. Seeds and chemicals.
Sounds like the real solution to this problem is the same solution to the housing market: Too many laws preventing new entrants, which prevents natural competition from lowering prices.
The problem is the needless and protectionist laws and regulations. If you want to see the effectiveness of monopoly regulation, look at California's PG&E vs Texas' deregulated electricity provider market. Californians are paying outrageous bills, meanwhile Texans have their choice of paying different electricity providers, and thus have much lower electric rates.
>Sounds like the real solution to this problem is the same solution to the housing market: Too many laws preventing new entrants, which prevents natural competition from lowering prices.
I could buy this for many industries, but real estate has no functioning free market dynamics because there is no external pressures to facilitate maximal usage of land value (and therefore sale or productive usage like building more homes), in fact most of zoning laws do just the opposite - they encourage low yield development for the sake of holding existing land owners value higher.
A land value tax would flip this narrative, applying an actual market force to real estate market dynamics. This would incentivize maximal productive use of land to pay for the land value tax. Not to mention, land value taxes are easier to implement and assess value on. It also puts an actual value on what makes the land valuable - the community aspect, like being located near shopping centers - and returns money back into the community. Combined with upzoning, you would see more churn in the housing market and massive incentivizes to build more housing, because you would finally have a pricing pressure on the value of the land.
Changing zoning alone isn't going to make the same dent either, because it does nothing to incentivize the sale of land, same with changing any regulation around housing. You need something that facilitates land owners to actively make productive maximal use of land value, and an LVT will do that.
> The problem is the needless and protectionist laws and regulations. If you want to see the effectiveness of monopoly regulation, look at California's PG&E vs Texas' deregulated electricity provider market. Californians are paying outrageous bills, meanwhile Texans have their choice of paying different electricity providers, and thus have much lower electric rates.
Even _if_ Texans were paying less on their monthly bills, does that matter if ERCOT's negligence ends up getting people killed and causing massive power outages during times when its needed most critically?
> The six largest publicly traded apartment companies in the U.S. — all of which are linked to an alleged rental price-fixing scandal — experienced profit increases during the first three months of the year, according to an analysis from left-leaning watchdog group Accountable US exclusively shared with The Hill.
> In the analysis, the companies earned a combined $300 million in profit during the first quarter of the year, in part, due to rent increases.
Lots of profit to squeeze out with regulation, based on the evidence. The Vienna model is a proven model if for profit enterprises walk away from housing.
https://thehill.com/business/housing/4718252-large-apartment...
https://accountable.us/report-top-corporate-landlords-see-pr...