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What I find interesting about this is that someone can still afford it because the market sets the price. We know that housing costs have increased immensely due to limited supply and because housing is a need, but someone can still afford it. Otherwise, they'd lower the price to whatever someone can pay. So if a lawyer cannot afford the rent, who can??
The old adage used to be that an empty rental was costing you money. Landlords would work for around 75+% occupancy, and to achieve that the price would also stay lower, to keep it occupied.
Then the price fixing of airlines happened, and the guy responsible (whose name I can't recall at the moment - maybe someone else does?) went into real estate with the same software approach. The theory? If you can charge enough off of a few to pay for all the others, then occupancy doesn't matter.
Let's use the numbers from the OP - $700 and $3600, with a 20 year gap. The post is from several years back, but let's use 2004 and 2024 for inflation calcs. $700 in 2004 is just a hair under $1200 today, so with a cost of $3600 - triple - that would mean one tenant has the same value to them as three. So if you have 6 units and have 3 tenants, you're now making a LOT more money overall, as those two tenants provided the same as six under the older model.
TL;DR: Shitty people and shitty companies trying to get the most money they can, with zero regard for the impact of these decisions.
San Francisco the first city in the nation ban the practice, using rent-setting software?
That still needs to go through an approval process, so not until September.
Even still, I wouldn't consider that regulation to be the end-all be-all of dealing with it. The ban, iirc, is specifically for "algorithmic price setting". So let's say that goes through, and I'm a landlord. Here's the regulation:
It shall be unlawful to sell, license, or otherwise provide to San Francisco landlords any algorithmic device that sets, recommends, or advises on rents or occupancy levels that may be achieved for residential dwelling units in San Francisco.
Well I can still hire a consultant, can't I? A person, maybe one who works for a larger consulting firm. So I hire them to determine the "appropriate" price. So this consultant needs to come up with the prices for me, how are they going to come up with it?
Well they can still use software to run calculations, right? As long as I, the landlord, am not purchasing, licensing, or otherwise provided a device that uses an algorithm (a very generic term here, which is a separate issue), that consultant can use a variety of tools to come up with values can't they? So the consultant uses multiples of the same systems for evaluation, and provides the landlord with the same price/price range I would have gotten in the first place.
This is how I expect it to be worked around at least.
3 lawyers and 1 teacher (who can only afford a corner in the kitchen) as roommates.
Rental prices are very possibly not determined by the market these days. RealPage and other companies like it may be colluding to fix prices at artificially high levels.
This ProPublica article covers the practice fairly well: https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent
EDIT: apologies, that was the wrong article. This is the one I wanted to link: https://www.propublica.org/article/yieldstar-rent-increase-realpage-lawmakers-collusion
Someone who has normalized paying upward of half their salary in rent.
Otherwise, they'd lower the price to whatever someone can pay.
Not necessarily. You'd have to look at vacancy rates. But even a city-wide statistic won't be very useful because it looks at low- and high-income units alike. Fancy new buildings have higher vacancy rates due to higher prices. If you had some way to isolate the vacancy rates of high-income buildings, I think you'd see there are quite a few vacancies.
So if a lawyer cannot afford the rent, who can??
Lawyer salaries are not universally high. The idea that lawyers make a lot of money comes from the top lawyers. Don't look at "average" lawyer salary, as the mean of a set of data can be heavily skewed by outliers.
With vacancy and short term rental rates rising that's just not true. They're raising prices because it makes sense for their business model and because they're operating in price cartels. The business model works because there's enough people who can afford it to cover costs on the rest of the units and have a profit still. The cartel works together to make sure there's no one undercutting with enough units to affect the market price.
Then they can go back to wall street and say they have x number of units worth y amount. Which is worth millions to the large rental corporations.
The idea of a million rental units all operating at market cost is outdated. It's more like 126 blocks of units with 8 of them at 100,000 and the rest spread between small landlords. It's the 8 blocks that set the market. Working together they're effectively a monopoly.
Renting black lists are another example of this. If you've ever taken your slum lord to court there is a chance the big corporations will never rent to you again. Which is like 90 percent of the market.
This type of collusion should be illegal.
The blacklist is legal in most states. The price cartel is not.
It's because housing became an investment. Like money, the majority of property will soon be owned by the 1%. The only ones who can afford it are those who are seeking to profit from it, or rent it. Suck everyone dry.
Not really. There are a lot of apartment complexes in places that are barely occupied because of the price. Or fit 3 people in an efficency.
It’s why there is a surge in homelessness in this country. Especially in big cities like LA and San Francisco
The screenshot is getting crispy, time to get it out of the deep fryer
I'm currently sleep deprived and thought they where working as a computer server for a second
I've worked through servers, on servers, and in servers but never knew I could work as a computer server!!!
Yeah, well, you know.. those landlords need more money for working so hard.
The price of monthly rent is being weighted by the value of a month's worth of AirBnB day-rentals. That's a big part of what is driving this. Everything is becoming ad hoc hotel space.
Why does this meme suddenly look like it's in Jeopardy format?
What is crippling depression?
I was able to buy a meager seven hundred square foot two bedroom house in a not great neighborhood eighteen months ago with an interest rate of 6.375%. The regular monthly payment is $1,870. Fortunately, I'm able to pay an extra $250 per week on principal so I'll have it paid off after ten years.
It ain't much, but I'm looking at housing security in retirement, and that feels like three quarters of the battle.
I'll probably never be able to sell it because the buying market around here demands three thousand square feet, several hundred bedrooms, and dozens of baths.
Fuck it. My Gen z daughter can deal with it when she inherits it, fully paid off.
She makes six figures already with no student debt and feels like it's hopeless to buy a house, so she can at least have this little hovel o' mine.
Edit: Should I meet an untimely exit from this iteration of mortal coil before the house is paid off, I've got life insurance that will more than cover the remaining principal. She can then choose to take the cash or the house, which at present would still net her sixty thousand after payoff.
I have never received a dime of support from family, so I'm hell bent on getting her every advantage possible.
I have never received a dime of support from family, so I’m hell bent on getting her every advantage possible.
I feel that. My parents ruined their finances and have been unable to support me in adulthood, so I make sure I set aside money for my kids and set them up to have options when they're adults
Before I even left home my father was unable to open a bank account due to bouncing checks. Four of us shared a pay by the week motel room for housing. At 17 I went out on my own and made something of myself. My father is a far-right Republican and so are my siblings... Me? Fuck the owner class. Who owns two homes though? My hypocrisy.
My sister and her boyfriend pay $1,400 a month to live in an 850 square foot, two bedroom house. Together, they earn ~$27 an hour and work part-time. I imagine they don't crack $50k a year combined.
When I moved in with my girlfriend (now wife) in the Fall of '16, we earned about $64k a year combined (roughly $83k in 2024 dollars). Rent was $800, car payment was $325, and we were each carrying about $3k in credit card debt. And we were struggling to make ends meet. What with the cost of groceries these days, I don't know how my sister is keeping her nose above water at all.
I don't know how my sister is keeping her nose above water at all.
I don't either, but I bet she feels like she's drowning.
Always have to consider inflation when comparing money from different eras. $700 would be $1164 in 2024 dollars. Still more than twice. Maybe the demand driving up the price justifies the rest?
What is criminal is when all properties in an area regardless of location or view are artificially raised beyond their realistic value, forcing out many who had been living there already. Can't say if this is an example of that or not.
What's criminal is being required to pay a landlord for access to a basic human right
This could go into a deep hole that I don't want to get into, but while I agree with you in principle, I also think that the property owner still has their own bills to pay (property taxes and such), that should also be paid. So rather than have housing as a free right, I tend to look more towards UBI or other solutions to aid the renter in keeping that home, while also keep taxation and other costs low for the landlord. AND maintaining regulation to keep housing prices down as well. It's a complex problem and no simple answers. (which it why I wanted to state my point while not getting too far into it :) )
Housing IS a human right. That's fine if you want to get into the details of how to ensure everyone can access that right. But the system we use does not change the fundamental human right to housing.
Maybe the landlord could cut out the avocado toast, or get a job.
What server these days is taking home $3500/month? (i.e. $21+/hour)
That's why I added that the value of that particular location could also be different than it was when it was $700. I have no idea, maybe it's not and even more run down and the prices are out of control.
Btw, that $21/hour is still below where the minimum wage should be if it kept up with inflation all these years. Plus, generally you shouldn't be spending more than 30%(?) of take home pay on housing, so there's that too.
I did almost 3x that as a bartender two years ago in Dallas.
Tbh the idea of a server working for less than $20/hr is insane to me.
I was making minimum wage as a runner after high school here in Stockholm. Minimum wage in the restaurant industry in Sweden is currently $14/hour.
Servers can pull in way more than that, like $40+/hr at semi fancy restaurants and Inns. Obviously it's location dependant, but $21/hr isn't crazy if you're on the US coast.
Bay Area fast food:
(Like super fast, very hard work, but still)
It's the second.
(Joke) I mean, he’s a lawyer. He probably couldn’t afford the apartment if it was still $700.
Have you tried lawyering harder?
Twist: He's one of those lawyers that only gets paid by the client if they win the case, and they're not a very good lawyer.
I'm a software engineer that works for a company in London. My salary is lower comparatively to many of those a level lower in the US.
I'm looking to move to California soon, where my salary will effectively double, arguably more so since I'll be taking more home.
I can afford a home an hour from work in London. In CA I seemingly can't afford shit, and rent nearby will absolutely wipe me out. It's insane how one can earn the kind of money people can retire on in Europe and barely live a middle-class life. I'm in an extremely privileged position, and given my position I have no idea how others manage to do shit like have families.
Have you considered investing in 1996?
/s
I wouldnt come to America until we see how our next election goes
If the Democrats win, you might be okay in a couple years
but if not, moving to California in 2024 is gonna be like moving to Poland in 1938
We are on the precipice of launching into fully unchecked fascism, or starting twenty years of the hardest repair work conceivable in order to make this country worth living in again
I really dont want to catch any legal flak for saying this but i just think if we caught and abducted a billionaire real estate mogul qe could probably have this problem like 70% fixed in under a week
Cost of housing has absolutely skyrocketed in blue states. I specifically settled down in Alabama because I have a 1400 sqft house 3 bed 2 ba for 550 bucks a month. Suburbs too. Moved away from my home state of California for exactly that reason
Yeah but now you have to live in Alabama
There are homes available in blue states for $100k, in the same place you can find them in Alabama.
Anywhere but a city.