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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.

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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.

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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.

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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.

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PhuncleSam t1_itvykct wrote

You can’t just boycott having a place to sleep

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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.

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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.

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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

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