The Department of Justice and eight states on August 23 sued the private equity-owned company that allegedly operated as the middle man in a national property management cartel that has sent rent through the roof. The civil lawsuit accuses RealPage of acting as helping to orchestrate an illegal price-fixing scheme to reduce competition among landlords so they can boost prices.
Notably, the behemoth real estate management companies using RealPage’s collusion software were not charged — yet. RealPage and the rental management companies, many of which are private equity-owned, are also facing dozens of class action lawsuits from tenants. The DOJ also opened a criminal investigation into RealPage, and the large apartment owners and managers that use the company’s pricing software, to determine if the firm is facilitating price fixing, sources told Politico in July.
Should they be charged with even more? That’s because in some of the cities where Realpage-using Landlords dominate the market, we’re seeing the number of homeless and deaths of unhoused people increase rapidly. Correlation is not causation but…
- Homeless numbers and deaths are up dramatically in areas where Wall Street landlords are particularly active and have turned to collusion software.
- That drives up rents and creates artificial scarcity.
- Among the biggest reasons cited for homelessness is the lack of affordable housing.
To really get a feel for the effect of the RealPage and property management company cartel, it’s best to look at individual metro markets. That’s because in cities like Seattle, San Francisco, New York, Boston, Nashville, Dallas, Atlanta, etc. the market can be dominated by large (oftentimes private equity-owned) companies, and if all of them are colluding using RealPage, the effect can be enormous.
Let’s focus here on Los Angeles. While the story is the same across many markets, LA also happens to be the epicenter of US homelessness crisis.
Los Angeles County is the 6th largest multifamily market with 448,848 completed units. Strategic Actions for a Just Economy, an LA organization that focuses on tenant rights and economic justice,
in their 2021 report, “Beyond Wall Street Landlords: How Private Equity in the Rental Market Harms Tenants,” found that more than two thirds of all LA Rentals are now owned by speculative investment vehicles.
Corporate landlords named in the RealPage lawsuits include Essex Property Trust, Equity Residential, and AvalonBay Communities — the three biggest players in LA real estate management.
Combined they control 35,020 multifamily units, or 7.8 percent of LA County’s 448,848 units.
According to lawsuits against RealPage and large property management companies, there are another 17 companies that use RealPage’s rent-setting tool in LA, and together, they account for just more than 52 percent of all rental apartment buildings in the LA market. [1]
A separate lawsuit against Santa Barbara-based Yardi, a company similar to RealPage, accuses it of using its RENTmaximizer (now Revenue IQ) product to do exactly what RealPage is accused of doing.
When you throw Yardi into the mix, that means that 79 percent of all multifamily rental units in LA County are being listed using collusion software.
Source: Realpage, Inc., Rental Software Antitrust Litigation (No. II), 3:23-md-03071, (M.D. Tenn. Feb 05, 2024) ECF No. 728
Widespread adoption of this collusion software has helped LA rent prices go through the roof in recent years. It is up 41 percent compared to 2016 — the year when RealPage hit “critical mass.”
These same mega landlords also shelled out millions to successfully stop California rent control ballot measures in California in 2018 (Proposition 10) and in 2020 (Proposition 21) with Essex Property Trust spending $26.2 million, Equity Residential paying $17.9 million, and AvalonBay Communities giving $17 million.
Homelessness and Deaths of Unhoused Skyrocket at Same Time RealPage Achieves “Critical Mass”
US homelessness was already a national disgrace, but the numbers in recent years as speculative investment took over housing and began using collusion software have become even more devastating.
A report from the University of California, San Francisco released last year — the largest representative study of homelessness in the state in thirty years — found that economic factors were the main driver of homelessness, including low wages, a sudden unaffordable expense, and the rising cost of housing.
A recent UCLA survey shows that 4 in 10 renters in LA County worry about becoming homeless. The lawsuits against RealPage and Yardi show why.
It’s not just that those companies have helped drive up rent. As Arizona Attorney General Kris Mayes says in his state’s lawsuit against RealPage, its algorithm often advises landlords to deliberately keep units vacant, restricting the housing supply. The lawsuits against RealPage and statements by the company’s founder indicate that RealPage played a role in undersupply by advising property companies to leave more units vacant in order to create an artificial scarcity of rentals. They found this helped their bottom line because they could charge more for rented units, and they could do this because property managers know that their “competitors” are also using RealPage’s system and will not undercut them.
The 2021 report by Strategic Actions for a Just Economy also shows that the same mega landlords using collusion software are the main culprits behind more frequent use of the Ellis Act to mass evict tenants.
Indeed, according to one of the lawsuits, the CEO of Camden Property Trust, Ric Campo, bragged about using RealPage and “pushing people out” of leases they could no longer afford.
Covid-19 protections for renters were allowed to expire last year on April 1, and evictions have come roaring back since, rising well above pre-pandemic levels. Despite all the whining about tenants living rent-free, data shows that the majority of evictions are for a median amount owed of $2,678.84, which is only a little more than the average price of a month’s rent in LA. Unsurprisingly, the county’s homeless population quickly grew by 10 percent after pandemic protections expired.
If someone doesn’t have either financial means or a strong support system, an eviction can often mean becoming homeless. While most believe it will only be temporary, it often is not. And the numbers in recent years as speculative investment took over housing and began using collusion software are absolutely devastating.
LA residents continue to fall into homelessness faster than people on the streets are moved into housing. The county now has more than 75,500 unhoused people — a 61 percent jump since 2016. This happens to coincide with the takeoff of collusion software from the likes of RealPage and Yardi.
Also since 2016, national homelessness began to reverse its downward trend in a big way. From PBS:
Homelessness in general has been back on the rise since 2016, according to HUD data. Between 2007 and 2016, the number of people reported in point-in-time counts as experiencing homelessness dropped from around 647,000 to just under 550,000. Since then, homelessness slowly but steadily increased year over year, until 2023 saw a sharp jump from around 582,000 to more than 653,000.
The number of Americans dying on the streets has also skyrocketed in that time.
A study last year from The Guardian and the University of Washington found that across 73 US cities and counties there were at least 18,000 deaths of people experiencing homelessness over the 2016 to 2020 time period with the number increasing 77 percent over that five-year period. (The federal government makes no effort to count the number of homeless deaths, and many believe the number to be much higher.)
In LA, the increases have been particularly devastating. According to the Los Angeles County Department of Public Health the mortality rate among people experiencing homelessness increased 56 percent from 2019 to 2021. It has since plateaued and at an alarmingly high rate. In 2023, 2,033 people died, a staggering 291% increase from the 519 cases recorded in 2014.
The data is almost surely an undercount as the medical examiner only has jurisdiction over deaths considered violent, sudden or unusual, or where the deceased has not recently seen a doctor.
Overdoses played a major role in the deaths studied, accounting for a third of the deaths.
Brett Feldman, the director of USC street medicine and who also treats unhoused patients said, “Nobody wants to be addicted to fentanyl. They’re usually trying to escape their reality and the suffering on the street, and many started using drugs to deaden the pain of homelessness.”
Homeless people are dying at increased rates of other things that might be avoided if they had a home or regular access to preventative medical care, such as heat and cold exposure, traffic injuries, cardiovascular disease and diabetes.
Even minor infections can become life-threatening as homeless individuals rarely seek treatment due to concerns over costs and the fact they’re preoccupied with where they’ll sleep and what they’ll eat.
One of the biggest reasons more homeless people are dying is simply the increase in the number of homeless. And that’s especially true of older Americans.
The number of Californians 55 and older who sought homelessness services soared 84 percent between 2017 and 2021, according to the state’s Homeless Data Integration System. That’s compared to a 43 percent increase across all age groups.
A February study published in the health policy research journal Health Affairs which found the death rate more than tripled between 2011 and 2020, concluded that “the most effective form of mortality prevention is preventing the occurrence of homelessness in the first place.”
And yet the government is a bystander to the carnage:
This scale of preventable death represents a form of mortal systemic exclusion in which governments have failed to meet the most basic needs of people experiencing homelessness.
Homelessness is usually the result of a confluence of factors, but given that RealPage, Yardi, and real estate management behemoths play such an outsize role in rental prices, vacancy/supply, and evictions, it’s hard to believe they didn’t directly cause individuals to become homeless, some of whom died on the streets when if they had been housed they likely would have lived.
We’ll see what the DOJ comes up with in its criminal case being built against Realpage and company, it sure would be nice if the charges go beyond antitrust violations.
I’m certainly no lawyer (maybe some in the readership can chime in), but if RealPage and company are guilty of price-fixing and cartel behavior that led to unaffordability, increased evictions, and an artificial scarcity, would it be too much of a stretch to charge them with something like involuntary manslaughter for the preventable deaths of homeless individuals who lost shelter due to the RealPage et al criminal price-fixing conspiracy?
Representative of American Neoliberalism
Of course, putting RealPage and private equity-owned real estate managers on trial for such crimes would also be an indictment of today’s economic system and government in America.
Because really the story of RealPage and speculative investment taking over shelter is a story that is representative of the wider economy — such as in other basic necessity industries like the healthcare and food industries. You could transpose the following crude chart I drew up to other industries and the story largely remains the same.
And of course the government has an opportunity to intervene at each stage but has failed to do anything so far. Instead governments are looking to throw homeless people into jail.
As Kamala said in her big economic speech, it’s an “an opportunity economy” — one where “everyone can compete.”
When I read that quote that “everyone can compete” it made me think of a scene that comes at the end of the 2012 film “Killing Them Softly” (based on the 1974 novel “Cogan’s Trade” by George V. Higgins). As an Obama speech that includes lines like “out of the many we are one” plays in the background on a bar TV, the hitman Cogan provides the real trickle-down social values of the American upper class:
And it’s, of course, bipartisan. Speculative investment by the big financial players went into overdrive during Obama’s foreclosure regime, and government has for decades largely withdrawn from any effort other than minor band-aids to prevent rapacious practices like the one practiced by RealPage and company. Trump picked up where Obama left off. When RealPage acquired its largest competitor in 2017 some DOJ staff reportedly raised concerns about the merger but were overridden by political appointees of former President Donald Trump.
The Biden administration surprisingly did go in the other direction with appointments at the DOJ Antitrust Division and the Federal Trade Commission, which are actually using their powers on behalf of the American people. We’ll have to see what comes out of the DOJs work on this case and if their and the FTC’s welcome efforts are allowed to continue under the next administration.
For now academia, the media, and finance are still eager to work with RealPage’s founder and invest in Thoma Bravo, which acquired RealPage in 2021, according to the Private Equity Stakeholder Project.
Despite the lawsuits against RealPage, more than 30 US public employee pension funds have invested a total of almost $4 billion in Bravo’s Fund XIV, the fund that acquired RealPage. These pension funds include the California Public Employees Retirement System, New York State Common Retirement Fund, and the Washington State Investment Board. The University of Texas Investment Management Company (UTIMCO) has been a large investor in Thoma Bravo, making six separate commitments into the company totaling $425 million. These commitments included a $125 million commitment to Bravo’s Fund XIV, (the fund which acquired RealPage in 2021). The University of Texas at Austin is also collaborating with Steve Winn, the founder of RealPage, to develop $200 million sustainable research facilities. Winn claims that Texas has “a fragile ecosystem that we need to protect,” and states that preserving the “land and the water for future generations of Texans is important.” However, The Real Deal notes that the facilities would be adjacent to Winn’s Mirasol Springs, a 1,400 acre development that has been the subject of concerns about ecological harm. The collaboration appears to be an opportunity for some positive press for the billionaire.
All that wealth and power is built on the broken backs of working people, many of whom were simply discarded when they could no longer keep up.
As Matthew Fowle with the University of Pennsylvania Housing Initiative and co-author of the February study showing the skyrocketing death rate of homeless Americans put it:
“It’s unlike any other mortality trend that we really see in demography. It’s comparable to something like a natural disaster or war.”
That’s probably because it’s a class war, and there’s no shortage of war criminals.
Notes
[1] They include AIR, AMC, Avenue5, Bell, Bozzuto, Brookfield, Camden, CONAM, FPI Management, Greystar, Pinnacle, Related, Sares Regis, Simpson, Trammell Crow, UDR, Windsor, and Winn.
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The craziest part of all of this, is the more homelessness there is, the more the real estate interests are able to use it as an excuse to allow them to change zoning and overturn restrictions so they can increase density, supposedly to bring prices down due to market forces. But of course it never works and the dense areas just get insanely more expensive, and all of the character of a city is destroyed because the real estate people only thing about maximizing profits so those new dense areas are always the cheapest possible construction. They rig the rents with the software, kick people out of their homes, then use the large numbers of homeless people as an excuse to allow them to build more expensive housing under the guise of bringing prices down.
And Yimbyism is the cover for them to do this. The Yimbys would pounce on your idea that “the character of the city is destroyed” as somehow preventing developers from increasing supply (with the hidden assumption that letting for-profit developers do whatever they want is the only way to increase supply).
That’s a good point fellow Chris.
It’s a weird world when you really have to parse what saying yes to development means in each context. I suppose it’s always been this way. There have probably always been people who took advantage of these things to make money and abuse the guidelines which the programs were commissioned under. It’s probably a fantasy akin to the noble savage that there was ever a society where the people who did the dirty deeds were ostracized from society once their misdeeds were understood.
What kills me about this debate everytime is it appears the people pushing for the status quo, or the expert opinion behind slightly changing the status quo so that more money can be made, appear to have even less capability for thinking than the planners of our forever wars. If our policies are intended to make housing continually more expensive to purchase and maintain, while we’re forcing down real wages, what are we supposed to do when less and less people can afford housing? And what are we supposed to do when the places where people can get jobs to pay for the continually increasing housing prices have a cost of living that’s even higher than average, which is already too high?
I don’t want a violent revolution in the US, because, I live here! All my stuff is here. But it feels like our stupid leaders won’t be content until they have created the conditions for one to erupt.
Sorry, I need to push back a bit and you can call this opinion a bit of a contradiction.
I tried being a land developer and gave up a few years ago. I refuse to put money into housing now as I’m pretty sure it’s severely overpriced across the board. Adjusted for inflation, were past 08′ pricing.
The other reason I gave up was the horrible NIMBYism. I was informed by my oh so competent planning department that building a quadplex in a neighborhood would be ‘inappropriate’ to its character. There were quads built there a hundred years ago, there is a light rail station a six minute walk away, and a greenway across the street.
If that was an inappropriate site to build a quadplex, then where the hell am I supposed to build it in the entire city?
Back in ’16 I could get numbers pretty close to building housing affordable to the middle class, households making 80,000$ or so. I would have to double the density of my projects though and the zoning code declared it was inappropriate.
I proposed a quadplex to the neighborhood group preparing to start a zoning petition. They were angry and demanded an affordable unit, 25% of the project. I shrugged and gave up pretty quickly. Most apartment buildings approved by the city of course have zero affordable housing.
Empty corner lots in the meantime and a few run-down homes in the meantime are being turned into mansions. They started ar 800k back then but now new homes are being priced at 1.6 million dollars. The city allows it by right. No neighborhood groups show up to protest.
It’s insanity. Building mansions close to center city is beyond crazy. How are nimbys heroic?
I’ll be nuanced. There are massive apartment buildings being built at the edge of the neighborhood. That is REIT money, Wallstreet money. I hate seeing them being built. The nimbys fight em but they fight duplexes too. They fight small infil projects. Never mansions… funny.
I’m rambling but the nimbys are pretty useless. They are getting overblamed for the crisis but they will never be known as the heroes.
Thanks to nimbys, they did tank the zoning reform efforts of the city. Even today, the genius planning department will still declare a quad is innapropriate at that lot location.
I agree. Unrestrained NIMBYism is worse than blanket YIMBYism. And NIMBYism takes many forms. People may claim that an existing property can’t change things because of some obscure law. Or they’ll throw up the barriers you described because you didn’t have the right connections. It all gets to the reasons why we can’t really build anything in the US anymore.
Hope I didn’t come off as grumpy to either Chris, but I was a little due to poor sleep.
It’s nuanced. This whole thing permanently damaged my enthusiasm for capitalism. The FED helps restart the bubble, and local governments promote nimbys. It’s a horrible combination that will take years to untangle.
I would argue that the local governments in highly desirable markets are more often aligned with the YIMBYs. For instance, in Austin, Greg Casar, a fake progressive who is bought and paid for by the real estate industry, constantly argued for YIMBY ideas and was very successful in getting socialists there to take his side and argue for things that make the real estate industry more money and drive up real estate prices. The whole time the socialists were screaming about letting free market principles ‘fix’ the housing crisis. They had no idea they had been taken advantage of. It’s all a matter of how many people on the city council and in the mayor’s office are in the real estate industry.
Also, just because there is green space and public transpo, doesn’t automatically mean it’s the right place for a quad plex. Lots of places have deed restrictions or restrictive covenants that don’t allow those types of things to be tossed in a community. Those are private property rights that everyone pays to get when they purchase the home. In cities with massive populations of drug addicts that don’t want to get better, those quad plexes often become the spot where the drug dealers can afford to live. Now the community has a huge and dangerous problem to deal with and their homes are under threat. The community sees that they will no longer be able to grow old in their homes. They will have to relocate. Some of them are very old or very young and it will be very difficult to start over. That’s why us Proud NIMBYs fight so hard to stop it. Once you have seen it happen, you fight to stop it from happening to you. It’s human nature. PROUD NIMBYS UNITE!!
I am not even sure how to start with this and I’m wondering if you are being sarcastic near the end of that post.
For starters, you are immediately equating quadplexes and small multifamily with drug use which is mildly offensive.
You mention the restrictive covenants.
So historically they were used to protect neighborhoods from African Americans trying to move into neighborhoods along with other minority groups.
Typically, only wealthier neighborhoods could establish restrictive covenants. They started with overt racial discrimination saying ‘No Negros’ and when that was struck down by the courts, it evolved to minimum lot size requirements and preventing subletting.
These are still enforced a mile away in the wealthy quarters of the city. Back in the day they forced people to build less affordable homes, and today prevent multifamily construction. It’s the wealthy slamming the gate shut to future generations, who proudly done it for over fifty years.
I’m saying this out loud, it’s class warfare. It’s all over real estate. I can read it in the zoning code and see it when white wealthier home owners show up to cry at city council.
You finally mention Austin. I see you take pride in tanking the whole CodeNext Austin process. I read the after action reports on it, and knew it would happen to my city.
Sooo… Jake, how much has your home appreciated in value these last ten years?
“Sorry, I need to push back a bit and you can call this opinion a bit of a contradiction.
“I tried being a land developer and gave up a few years ago. I refuse to put money into housing now as I’m pretty sure it’s severely overpriced across the board. Adjusted for inflation, were past 08′ pricing.”
While I do not understand what is happening, I have national comprehensive home price data from 1890 from Robert Shiller. From 1890 to 1994, home prices closely tracked inflation. From 1994 to the present, home prices have risen far faster than inflation. This is unprecedented and even Shiller does not understand what is happening:
https://fred.stlouisfed.org/graph/?g=YcwR
January 30, 2018
Case-Shiller Real Home Price Index, 1992-2024
(Indexed to 1992)
Shiller, by the way, has a Nobel Prize in economics, and when he fails to understand price increases in the housing market, I suggest caution.
Shiller needs to look up from his graphs and smell the new variables out there ruining our economy.
ZIRP for way too long for no reason. Trillions to PPP that got shunted to accounts of wealthy instead of maintaining employment. Weighted stock indexing shooting far too much investment into a handful of giant tech stocks. Stock and crypto millionaires looking for safe places to park their gains. Tax laws designed to encourage homeownership instead allowing free capital gains for flippers and multi-home owners. 6% commissions get higher and higher if home prices inflate, so agents inflate them. Developers only build expensive homes to keep their margins high. Retirees and the wealthy sucking up one main home, 1 or 2 or 3 vacation homes too. Others trying to start little AirBnB empires. Fed keeps quietly pumping trillions into the money supply while claiming it’s fighting inflation.
I’m sure there are others. I’m sure none of them are plugged into the models of economists.
There is a web site I saw called what happened in 1971. It is pretty convincing. Going off the gold standard seems to have had quite a negative effect.
*Sigh*
No, it was running large deficits when the US was at full employment to fund Vietnam, Johnson’s Great Society programs, and the space programs. Neither Johnson nor Nixon was willing to raise taxes to pay for an unpopular war. If the US had not gone off the gold standard, we would have had to massively devalue the dollar in gold terms, so the Saudis would likely have raised oil prices in that scenario too.
This chart is in my nightmares, been in my nightmares for years.
Investment opportunity.
Convert apartments to condominiums using fast track authority from local governments.
Sell, hah, to Nancy’s Newcomers with those cool new loan programs.
Priority given to swing and purple state properties.
Retain management fees, consider also ground leasing each property to sever interests, and juice returns.
Implement foreclosure and resale operations for another bite at the apple.
Continue donations to appropriate parties, tax-deductible, of course. /s
The economic plan is private profits at the expense of public wealth equals low individual income and public poverty.
“character of the city” is destroyed by Nimbyism, Japanese zoning laws make much more sense, and housing is much more affordable there.
It’s clear the way NIMBYism has ruined affordability for the US and Canada
This sounds more like a case where they should call up the RICO Act-
https://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act
It’s a racket alright and lots of collusion going on crossing State and Federal lines.
Keeping 20% of your units offline works if you can change 30% more for the units you lease, and that only works if you know all the other landlords are doing the same thing. Fancy software is an attempt to make collusion look legitimate.
Exactly. It also saves on energy costs and maintenance costs and lets you be more exclusive with who you rent to. It’s an amazing opportunity for some property owners and managers, as long as you know you won’t be penalized for doing it. With everyone following the same rules because they’re all in the same club, the owners and managers don’t have to worry.
There was a time, up to 2005 in my experience, where a prospective tenant, at least in NYC, could actually negotiate with a landlord…all gone now…no more capitalism…go to “street easy” and plug in any location in manhattan with your choiice of size of apt., all the rents will be almost exactly the same…what is terribly shoicking is that as rents have doubled, even tripled, the quality of the areas and the buildings themselves have deteriorated…a real rip off…further, without taxpayer funded services, sidewalks, garbage, police, fire, safety codes, roads, sewage, water…these buildings would have limited value…but the taxpayer gets nothing back from the raised value of these buildings…its a criminally monopolized industry gauging the public…
Just relocated from Boston area to Knoxville. Had been casually planning move for more than a year, and “studying” home prices in Tennessee (generous use of studying as it consisted mostly of viewing homes for sale on reactor.com). Then a few events occurred and realized it had become the perfect time to make the jump even though original plans had been to stay in Massachusetts a few more years. Knoxville and similar cities and towns in eastern Tennessee seem to have same market conditions meaning homes sell briskly but not insanely like in Massachusetts where multiple offers over asking price are typical. I acquired a sense of which homes would sell quickly, and which ones I would like to live in. One difference between the Tennessee vs Massachusetts markets the listing agents in eastern Tennessee often included text in the description similar to “perfect for a home or INVESTMENT” (emphasis mine) and one even bragged of it’s current rental income saying it could be viewed only during buyer inspection. I have to tell you it had already entered my mind that once I sell my Boston area house, I could buy another house in Nashville with a very positive cash flow from in part because property taxes and utilities are so much lower than in Massachusetts. I asked my broker why he thought taxes and utilities are lower in Knoxville, and he seemed to get it right showing he knows the plot: elected officials are keeping rates low but at some point decades in the future taxes will have to change to accommodate infrastructure maintenance, but at present none of the elected will go there.
Electric utility rates are low because of TVA generation and transmission and municipal owned distribution companies. It is socialism. Massachusetts and the entire northeast have “competitive” markets the charge for generation “supply” at the last-dispatched highest-cost generator. Distribution is by “wires companies” that have significant delivery charges. The TVA service territory has none of this Thatcher based deregulation. Ask them Dixiecrats if TVA should be privatized. Bonneville in the northwest is largely the same socialism.
“America is not a country, it’s just a business..” Nothing binds us together. Nothing beyond the individual.
Nihilism equals hedonism, selfishness and greed.
And the ruling financial parasitic class will make money off other people’s misery. Obama is a joke.
And the madness continue…
Clearly the homelessness crisis is the sharp end of the coincident housing affordability crisis, and equally clearly the RealPage family- bloggery is an outrageous example of n-many antitrust violations, but I fear this obscures a more fundamental fact: “the market” will NEVER build sufficient low income housing. NEVER. And its precisely this insufficiency of low income housing which dooms us to a homelessness crisis.
For more than 30 years now governments at all levels have abdicated their responsibility for building low income housing. Until they purge themselves of the ghastly neoliberal mind-virus which asserts “the market will provide” we will continue to spiral ever deeper into the homelessness and housing affordability morass.
By all means, pulverize RealPage and its accomplices into the dustbin of history, but don’t kid yourself — while clearly necessary, it is insufficient.
For models of public housing that actually work, I suggest Vienna and Singapore.
>>>For models of public housing that actually work, I suggest Vienna and Singapore
Yeah, well, but that’s the evil communism, which means, I believe, that they will eventually bring in the security state including the FBI, CIA, and NSA plus your local police to stop it, not to mention the vast resources of both billionaires and private equity.
No, I am not being hyperbolic or joking.
Don’t forget the US had quite a bit of public housing but it was torn down because of the issues related to the occupants. I lived until recently in a suburban apartment complex in the LA area built over 30 years ago and well maintained. At the time a small percentage of the apartments had to be reserved for Section 8. The police were being called there at all hours to the Section 8 part. Drug sales and periodic violence even with guns was endemic. We moved out as the social dissolution is getting a lot worse. The government provides a lot of housing today on Section 8 and landlords take it whether they like it or not. And I wonder if the extreme rise in housing prices relates to the fact that the US has devalued the dollar rather dramatically since 1971. Housing prices are the most visible consequence but look at the price of everything else. Lawyers charge 900 per hour in this area.
In cities such as Vienna, it is more social housing instead of public housing, which is building housing that is attractive to everyone from the poor to the upper middle classes, meaning mixed maybe even a smidge higher, in cost, quality including maintenance, and perks such as gyms, restaurants, etc. meaning mixed housing. From what I have read, tenants can stay for life and have their rent adjusted for income.
It seems that American public housing was designed to fail by making the housing just for the poorest and always having inadequate service especially maintenance, which being poor, the tenants lacked the resources to fight city hall for the needed service.
On section 8, demand has always exceeded supply and in the San Francisco Bay Area, landlords often will not accept them, meaning people can lose their vouchers after IIRC 60 days, and after waiting years, sometimes more than a decade. The waitlists are all county based with some counties having a few years and others more than a decade.
This is quite clearly collusion, and real estate is not the only industry using these practices
My company provides services, and we generally raised the cost of those services year over year as our own expenses increased. Pretty much business as usual. Then several years ago we started using a consultant. We provided this consultant with all of our pricing date (for free – nice work if you can get it) which they then compared with data from competitors in the industry that they had also received for free, and came up with a price structure to use for the next year. They invariably determined we should raise prices – quelle surprise! I have absolutely no idea why the higher ups decided to give away proprietary data so a consultant could charge us to recommend what we were going to do anyway, other than that they are not particularly bright and are just doing what they learned in MBA school. And of course now we had to increase prices just a little bit more to cover the cost of the useless consultant. And the ratchet keeps turning.
And when that “consultant” has his or her files hacked….
“This is quite clearly collusion…”
A splendid analytical comment.
I don’t know how many (or how few) in the US are aware of the trends illuminated in this excellent post. Government policies towards housing have allowed — correction, encouraged — the privatization, financialization, and exploitation of Maslow’s most basic physical needs: shelter, food, security. As I believe Michael Hudson has argued, for a country’s private industry to succeed economically requires that these needs be provided by significant public subsidy. In the US both political parties support the notion that these needs should be exploited by “the market”, which as someone above has commented, will never provide low-income (or with collusion, even affordable) housing.
As per the video excerpt, “America is … just a business”. It seems to me that it will ultimately fail unless it fundamentally changes course and sheds this philosophy. But the US has been on the neoliberal path for so long, that most people have no memory of it being anything else. Obama’s self-serving and deceitful promises of “change we can believe in” squandered the last opportunity. Power — in the form of wealth — is now so concentrated in this country that large numbers of its citizens have none.
Depressingly, in The Great Leveler, Walter Scheidel shows that fundamental correction of increasing wealth disparity has occurred historically only with the “Four Horsemen”: war, revolution, collapse of the state, or plague (or other “natural disaster”, easily provided by impending climate and environmental deterioration). Is that the path we’re on?
I know I’m saying nothing the NC community doesn’t already know. But I don’t know what else to do, save shouting into the wind. In many ways, things seem hopeless; one’s best bet is to provide for, form alliances with, and rely on one’s neighbors — regardless of what color flag they plant in their front yard.
It is not just at NC. I am pretty sure that the average libertarian, conservative, liberal, leftist, marxist, and so on, will agree that this cannot go on as it is making living as a practical thing impossible, regardless of ideology, but it seems that the people running things just want to rearrange the Titanic’s deck chairs for appearance’s sake as the water rises.
Yes.
Unfortunately it can go on, our quality of life can be reduced, and reduced, and reduced, little by little. Look at the misery, insecurity, and want in poorer parts of the world, there’s no reason we can’t wind up there too. We are powerless against overlords with no conscience.
You could always eat them (your neighbors). That’s the status quo, albeit abstracted with economy. Take away the economy, and voila!
Kamala: “everyone can compete”
What idiots our elites are. It’s absolutely mandatory that we switch from:
Compete to consume, to
Cooperate to conserve.
Profit uber alles keeps us on the Highway to Hell.
This practice is also combined with the form of deliberate elite-level contempt, as is well described in this article on Grenfell:
https://www.theguardian.com/commentisfree/article/2024/sep/01/grenfell-inquiry-culture-of-contempt-britain
Instantly recognizable in Ireland through past Fine Gael leader Varadkar – and the Tory’s in the UK – that leaders are often chosen almost explicitly for their ability to have the PR appearance of being a caricature of a ‘let free markets eat all the babies’ villain – which you would think would be a vote-loser, but is actually playing to these parties real audience (the powerful, not the public) – and it doesn’t actually seem to be losing them enough votes, to get them removed (Labour in the UK just being ‘NeoLiberal-villains-lite’).
Ireland has been fairly advanced, on the cutting edge pretty much, of this particular style of contempt and collusion between industry and politics (though there isn’t a RealPage equivalent, here – however I suspect Estate Agents may be playing that part, in collusion with industry interests) – and, well, I’m not seeing a bright future ahead anytime in my lifetime – it’s looking like this can be kept going permanently.
It’s gotten to the stage where the victims of the Housing Crisis are literally forced to disenfranchise themselves, by moving away (no vote for non-residents) – so I don’t see any way of this trend lessening, nevermind reversing.
You might think those affected may be sharpening their guillotines in preparation for fighting back, but I think the far-right and recent racist riots is actually being used to co-opt and mimick parts of what a left-wing opposition to this Class War would look like (while mixing it up with far-right bigotry) – in order to (possibly expressly to) trigger a pre-emptive curtailment of civil liberties (particularly speech/political-expression), as well as an advancement of authoritarian/police-state powers – as well as (actively/currently) causing politicians to shield themselves from the public in anticipation of violence.
It’s looking like this Class War is not just one that the public are losing Very Badly, but one that might already be fully won – and that we might be in the middle of a transition period into a very bleak future – which it’s not yet fully clear what the outline of it will look like (even for someone as cynical as myself, who keeps informed through NC).
These lawsuits are good news. A good beginning. Here are some other ideas to end homelessness in the USA:
1) Tax vacant residential properties and vacant apartments, thereby eliminating any financial incentives for the owner to leave the properties vacant.
2) Regulate AirBnB and related businesses, aiming to return about two-thirds of these vacation rentals back to residential rental market, which would increase housing supply.
3) Tax and regulate vacation home ownership, specifically by taxing ownership of more than 1 vacation home. The goal is to target the wealthy who own multiple properties as an alternative asset class, and do not actually live in these homes.
4) Make it illegal for private equity and Wall Street to own single family homes and residential real estate. Homes should not be a speculative asset class for Wall Street.
5) Regulate the banking industry to prevent future speculative real estate bubbles.
6) Subsidize civic planning and create incentives for managed urban growth; subsidize small farms and small businesses to re-populate rural areas.
7) Return to sound money, as opposed to the endlessly exanding fiat dollars which drives up the price of things we can’t import, like housing, healthcare, education.
8) Institute martial law. Open US military bases to occupy areas like West Palm Beach FL., Greenwich CT., Martha’s Vineyard and other places where the wealthiest Americans congregate. Every now and then, seize the assets of an American oligarch and disappear their whole family into someplace like Guantanamo. Continue this strategy of selective class terrorism until the legal and social reforms can take hold, the power of the oligarchs is restrained and the American people can begin to flourish once again.
Of course some of these ideas might be a bit more feasible than others…
Looks like Russia, 1918
J
This article addresses multi family housing, but private equity/investment companies are buying single family homes here as well. When I was renting 20 years ago, most houses were owned by individuals and managed by a local property management companies. This isn’t as common these days. I know many college graduate, employed people who are 25-35 who rent houses with roommates in order to afford rent and who pay an anonymous corporate entity.
I am really surprised that the artice does not mention this, but the FTC has a name now for what software like Real Page is doing and they are labeling this “Surveillance Capitalism”. Lina Khan (who was also not mentioned by name in the article) and FTC are actually doing something about this. One of the reason I am holding my nose and voting for Harris is that the FTC under Khan appears to be moving in the correct direction regarding anti-trust and collusion suits. All of this takes time and avoiding disruptions at the agency like firing most of the crooked federal workers need to be avoided to make any meaningful progress in anticollusion suits the FTC is bringing. The other factor is once people are displace from housing the streets are so awash in drugs it just a numbers game that a fraction of the homeless will eventually be beset with a drug habit. I’d like to see more articles on this subject on NC, but it appears China appears to be operating a reverse opium war with the US. I don’t remember if I saw the article here or elsewhere, but Chinese drug cartel money laundering has been identified in Canada and is likely going on here – proceeds from fetanyl sales administered through Mexican cartels. We have a war here, I’d like to know more this it beyond personally knowing people who have died from fentanyl OD. It is deeply disturbing that a major trade partner and the country where most of our manufacturing base has gone appears to be actively working to undermine the social fabric of the country. Is this allow, are there resources being deployed to fight this.
Thanks Mesoscale. Unfortunately ran out of time/space to get into Khan-led FTC actions here, but NC has been on it. For just a few recent posts see here and here, and it also regularly appears in the daily links.
Please excuse the typos. I attempted to edit after the fact but was timed out. Needed more coffee.
lentil has some very good ideas. I like them all.
As Obama and his justice (sic) department demonstrated, civil penalties are meaningless. Nothing will put a dent in this corruption before the principals are prosecuted criminally.
A passive-limited PE landlord bought my complex from an active-limited PE in 2023. The new landlord uses Yardi’s “RevenueIQ” nee “RentMaximizer”, and is involved in the civil suits. I’ve had a front-row seat watching active limited investors create incentives to prevent the worst abuses in PE space then watching how differently an LBO with passive limited partners operate. While pricing collusion via RealPage and Yardi is illegally taking money away from tenants, homelessness is primarily driven by other PE abuses:
1. Financially-precarious short-term tenants are by far the most profitable to the general PE partners. Absent meaningful oversight by limited partners, the general partners will push out less-profitable long-term financially stable tenants in favor of putting those who can barely afford the rent into the sweatbox. This happens at the most expensive complexes as well as the least expensive. Resulting evictions increase homelessness, much like predatory lending drives bankruptcy.
2. Financial losses generated by evictions, vacancies, and excessive maintenance/operational expenses are borne by the limited partners. Increased costs to the limited partners generally increase profits to the general partners. Contractors may be owned by the general partner incentivizing excessive use and price padding. This will be to the detriment of the tenants as well as the limited partners.
While eliminating monopoly rental pricing would be welcome and may indirectly reduce homelessness, it doesn’t get at the root of how predatory renting and inverted cost-maximizing incentives are driving evictions and homelessness with PE landlords. The surplus monopoly rents benefit the limited partners so they may look the other way when being taken by the general partners. However, taking those surplus rents away doesn’t guarantee that the limited partners will prevent the abuses driving evictions.
Real reforms need to eliminate predatory renting incentives as well as collusive pricing. Ensuring the limited partners have legitimate financial interests (not simply laundering ill-gotten money) and act to meaningfully regulate the worst general partner cost-maximizing abuses would be a start. If this can’t be accomplished, perhaps PE landlords need to be regulated away.
Thank you takes, for this detailed comment.
My reaction is just: man, what a vicious, vicious system. As I said above, I wonder how many in the US are aware of just how predatory these systems* are. At one time, the discovery of such practices would have generated a frontal assault by the press. Now, the NYT describes the DoJ suit in the context of a “hot button political issue”, casting it as some sort of controversial factoid while carefully eliding the obvious depravity of investors knowingly forcing people already in dire economic precarity into homelessness via inflating their housing costs. And where is Kamala on this issue? In a moral society, such practices would be swiftly and publicly condemned and outlawed. But not today. Is public response to these abuses really just a shrug? If so, as Lovell says above, “Nothing binds us together. Nothing beyond the individual.”
What a country.
+++
*Ditto banking, health care, insurance, education, etc.
Not mentioned is the 800 pound gorilla in the room of many a sgmhort term rental, that has effectively done away with any chance at long term rentals..
Sequoia NP has 40% of their full-time positions empty because there is no place for a fern-feeler type to live, and of course all those AirBnB’s are there so tourists can visit the National Park.
“One of the reason I am holding my nose and voting for Harris is that the FTC under Khan appears to be moving in the correct direction regarding anti-trust and collusion suits. All of this takes time and avoiding disruptions at the agency like firing most of the crooked federal workers need to be avoided to make any meaningful progress…”
I have read of no “crooked” federal workers at the FTC and think this accusation is unfounded. Also, I can not imagine failing to “fire” federal workers at the FTC found to be “crooked.”
The passage appears to be unfounded and self-contradictory.
Thanks for a great job putting this together, Conor. You’ve created a very thought-provoking frame through which to view what’s been going on in corporate multifamily pricing and capacity management. My skin crawled more and more the further I read, as I realized the connections you’re making are plausible and very damning. Let’s hope the current leadership at FTC and DOJ Antitrust stay in place after this election. A lot of lives are riding on that.
Pathetic. If human beings can’t even solve something so simple as housing no way they will be alive in the near future or be taken over by another species.
This article has been written by someone who has no clue about apartment rentals and the lawsuit is a frivolous one.
I manage more than 100 units for different owners and I can tell that a vacancy is the worst nightmare for any owner. You have to double the rents to compensate for 50% vacancy which makes no sense at all.
Plus if such collusion was true, the vacancy rates would be spiking which is not supported by the evidence.
https://fred.stlouisfed.org/series/RRVRUSQ156N
This article is utter nonsense!
Housing is out of rich for most Americans because of the deliberate policy of the Fed to pump up asset prices in order to create their cherished “wealth effect” and juice the economy.
It was a failure as all policies crafted by bureaucrats are and all the wealth effect did is enrich the already rich.
The question should be why did the Fed buy trillions in MBS?
Why is the Fed not selling them quickly now?
Why is the fed pursuing a policy of supporting asset prices by hook or crook?
Blaming landlords is just another way to deflect the responsibility from the real culprit and create more tension in our social fabric.
https://fred.stlouisfed.org/graph/?g=1pq1O
January 15, 2018
Consumer Price Index Rent and Rental Vacancy Rate, 1992-2024
(Indexed to 1992)
https://fred.stlouisfed.org/graph/?g=1pqtK
January 15, 2018
Consumer Price Index Rent and Rental Vacancy Rate, 2000-2024
(Indexed to 2000)
deliberate policy of the Fed to pump up asset prices in order to create their cherished “wealth effect” and juice the economy.
I am not an economist , but…
my opinion is that the fed juiced asset values to cover the rehypothecations the banksters sold which aig insured but couldn’t cover so enter uncle sugar…and it was so easy they couldn’t stop themselves…and the story of wealth effect was a good sounding excuse which may have been real but wasn’t the real reason for the bailouts. This morphed into…well if we give our corpses unlimited cash it will make taking over the world easier but I may be a bit reactionary.
Also 0% rates led to a lot of sro’s getting bulldozed for luxury towers which contrary to your assertion have probably never been close to full occupancy if downtown seattle is any indicator
>>>Also 0% rates led to a lot of sro’s getting bulldozed for luxury towers which contrary to your assertion have probably never been close to full occupancy if downtown seattle is any indicator
In past decades, Oldtimer would have a very good point, and he probably still has a point; however, the current economy is different from the old, just as banks no longer make loans for people to build factories and businesses, but by financial manipulation; builders’ and investors’ money was made in part from taking out the loans needed to buy the land and build the condominiums and apartments, not in the selling or leasing them at a rate customers could accept. The essentially free or nearly free money means that the old rules didn’t apply.
I don’t know what OldTimer is talking about. The SROs were turned into middle class or high end apartments LONG LONG before ZIRP. Maybe it was later in Seattle but it was in the 1990s in most other cities.
My point is that out of 50 million of the rents units in the US , half are owned by small owners and they are 1 to 4 units in majority.
Any idea that there is collusion to raise rents by keeping units vacant is sheer lunacy from a financial perspective and that the vacancy rates in the US do not support this claim as they have been going down not up.
Landlords raise rents because people can afford to pay. At some point people won’t and vacancies will increase then landlords will lower the rents, it’s as simple as this.
People got a lot of cash post covid, and they are still flush with money as we have been increasing rents again by the maximum 10% allowed in CA this year and no vacancies .
People got a lot of cash post covid, and they are still flush with money as we have been increasing rents again by the maximum 10% allowed in CA this year and no vacancies .
Where are hey going to go!
Under the bridge?
I think it’s kind of crowded there right now.
I’m guessing Oldtimer doesn’t price with RealPage or Yardi and doesn’t manage rentals in markets that these companies have monopolized. The owners of Oldtimer’s units are likely better described as “active” rather than “passive.” If Oldtimer’s owners were “passive” and only got paid when Oldtimer sold the property, he’d manage the properties completely differently than he does today.
If he managed his units like a PE general partner, he’d make sure his investors (owners) would be as passive as possible, ideally recruiting foreigners with ill-gotten gains from other enterprises. He’d make sure his units were located in areas that could easily be monopolized – smaller/mid-sized cities with newly renovated downtown areas serving upscale folks. This market would be dominated by larger complexes of 200-500 units, perhaps just 10-20 complexes in the downtown area owned by maybe 5-10 players. Get those on RP or Yardi without pricing competition and rents would skyrocket.
The rental monopoly phenomenon is local (as all real estate) and quality dependent. You can’t see it at the 30,000 foot level where you look at US aggregate stats. Look at key local segments from the perspective of a someone with a job that needs/wants a place to live nearby. If a large percentage of the acceptable choices for the renter are controlled by RP or Yardi, they’re getting ripped off.
SROs in New York City; a long term review:
https://www.nytimes.com/2023/12/12/nyregion/new-york-sro-apartments.html
December 12, 2023
New York Wants to Pay Landlords to Fix and Rent Single-Room Apartments
By Mihir Zaveri
The Latest
New York State is planning to pay landlords who rent out single room occupancy units, commonly known as S.R.O.s, in an attempt to fight homelessness by slowing the decades-long decline in the number of small, cheap rental homes.
Through the program, which is being announced on Tuesday, the state will spend about $50 million to help landlords repair and renovate about 500 S.R.O.s and keep them livable and on the market. It is the first time the state has funded such an effort, and is something of a reversal in attitudes toward S.R.O.s, which for many years were targeted for elimination by government policies.
Background: S.R.O.s were once a big part of New York City’s housing stock.
S.R.O.s are typically small apartments with a private room but shared kitchen, bathrooms and other amenities. They are more affordable than conventional apartments, making them attractive to people struggling with homelessness or those who have limited incomes…
indeed, and the way to fix this and restore affordability is to let asset prices fall, stop manipulating interest rates, stop the bailouts, let bankruptcy work. This will clear out speculators who overpaid for their apartment buildings and have to increase rents to afford the high mortgage payments. It will also allow prudent savers buy the assets at 50% discount which will automatically bring down the rents as les income is needed to service the lower mortgage.
This will clear out speculators who overpaid for their apartment buildings
Otherwise known as the investors who own the house/apts you manage
yes, I know quite a few of them that bought because rates were zero and were rightly counting in appreciation only and Fed generosity. Right now many of them would be bankrupt if they have to renew their mortgages as rental income does not support the new interest payments, its barely supporting the existing payments and they arent making any money. I call those speculators.
But there are also others who bought with a substantial down payment and based on reasonable cash flow projections (rental income rather than appreciation) , and they will be ok, I call them investors. I have no special sympathy for the owners, apartment building is a business like any other, they provide a service and its wrong imho to blame them for rental increases just as its wrong to blame retail for price increases, its what happens when the Fed in bed with government print trillions and distribute it willy-nilly
The long term record in 2 depictions:
1) https://fred.stlouisfed.org/graph/?g=1to25
January 15, 2018
Consumer Price Index Rent and Rental Vacancy Rate, 1960-2024
(Indexed to 1960)
2) https://fred.stlouisfed.org/graph/?g=1to2T
January 15, 2018
Consumer Price Index Rent and Rental Vacancy Rate, 1960-2024
(Indexed to 1960)