HeavenlyPossumJul 15, 2023

A journalist recently noticed something strange about the New York City housing market. During the peak of the COVID crisis in NYC, the city lost close to seven percent of its population as people either died or moved away.

The real estate vacancy rate was close to twenty-five percent.

Since then, according to an array of parties with considerable interest in rents, the population of NYC has rebounded. As a result, housing is once again scarce and rents have soared.

Except…there’s no actual indication that the city’s population has actually rebounded, and certainly not by enough to explain soaring rental prices. After all, the city’s population had already started to decline before 2020.

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https://www.curbed.com/2023/01/nyc-real-estate-covid-more-apartments-higher-rent.html

Show threadHeavenlyPossumJul 15, 2023

It’s hard to explain this discrepancy unless you assume that landlords are conspiring to keep housing stock empty and off the market—ie, “warehousing”—to keep supply artificially low and prices high.

As of 2021, there were over 40,000 rent-stabilized apartments warehoused in the city, so we might imagine that the total number of apartments being withheld is much higher.

But that’s absurd, some neoliberal might declare! How could landlords, who are very numerous, conspire with each other across the entire city to manipulate the market ?

ProPublica helpfully supplies the answer: a firm called RealPage, which provides software called YieldStar, which allows landlords across the country to coordinate price increases en masse:

https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent

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Rent Going Up? One Company’s Algorithm Could Be Why.

Texas-based RealPage’s YieldStar software helps landlords set prices for apartments across the U.S. With rents soaring, critics are concerned that the company’s proprietary algorithm is hurting competition.

ProPublica
Show threadHeavenlyPossumJul 15, 2023

Our neoliberal friend might still object: capitalists don’t want to withhold products from the market, silly! They want to sell as much as possible to as many as possible to maximize revenue.

Except, as Blair Fix reminds us, capitalists actually have two very broad options for maximizing revenue: breadth (selling more stuff) or depth (raising prices). Breadth is socially sanctioned and, in neoclassical orthodoxy, the only possible way for capitalists to behave.

And we empirically observe capitalists pursuing depth all the time! Amazon, for example, has been observed destroying unsold consumer products by the warehouse-full. Despite its vast volume, Amazon has still decided that it’s better to sell fewer things for higher prices than more things for lower prices.

https://economicsfromthetopdown.com/2022/12/15/inflation-everywhere-and-always-differential/

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Inflation: Everywhere and Always Differential – Economics from the Top Down

Here’s an update to my post ‘The Truth About Inflation’. As expected, inflation is still differential. And no, it’s not caused by government spending.

Economics from the Top Down
Show threadHeavenlyPossumJul 15, 2023

You might have noticed lately a glut of media coverage of the “drawbacks” of remote work. Sorry, did I call it media coverage? I meant “naked propaganda.” Take, for example, this comically transparent effort to make remote work look unhealthy and ugly:

https://studyfinds.org/remote-workers-claw-hunchbacks/

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Future shock: Are remote workers doomed to have claw-like hands, hunched backs?

A new study examining the future of the workplace might have you running back to your office at warp speed!

Study Finds
Show threadHeavenlyPossum

This glut of propaganda is, in the terms of Italian Marxist Antonio Gramsci, an effort to impose “cultural hegemony,” a process by which institutions of power attempt to convince us that the beliefs and preferences of the ruling class should be our beliefs and preferences.

And, according to our elites, “we must get back to the office.” Government officials tell us this. The press tells us this. Many firms tell us this and have attempted to order workers back into the office. “Think tanks” like StudyFinds in the post above tell us this.

Why are they all so obsessed with convincing us to come back into the office?

Workers are easier to monitor and control when they’re in a centralized workplace, of course, but there’s something more to it than that.

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Jul 15, 2023 at 4:23pmWeb
Show threadHeavenlyPossumJul 15, 2023

Commercial real estate owners borrowed something like $1.2 trillion before the market collapsed during the COVID-related downturn, and vacancy rates remain as high as twenty percent. When workers can work remotely, firms need to spend less on office rental, and these owners can’t make their interest payments. They face ruin.

So do a lot of other actors:

“Major cities have spent the last several decades catering to these corporate landlords. Now their entire downtowns rely on workers for commerce. We’re talking about all those restaurants and coffee shops that serve breakfast and lunch to white-collar workers, and all the bars where people used to go and complain about work before they spent an hour commuting home.

These cities also depend on property taxes from overpriced commercial real estate. When nobody wants those buildings, their value plummets. New York alone has lost $453 billion in office real estate. Across the U.S., office buildings have shed anywhere from 40 to 80 percent of their value.”

https://jessicawildfire.substack.com/p/remote-work-hurts-corporate-wallets

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Remote Work Hurts Corporate Wallets, So Will You Please Come Back (Or Else)?

What's really behind this push back to the office.

OK Doomer
Show threadHeavenlyPossumJul 15, 2023

While residential landlords can keep stock off the market and raise prices—people need shelter or we tend to die—commercial landlords aren’t as lucky. Many firms do not require office space; they can choose to let their workers work from home.

But we have an entire economy based on the parasitic extraction of rents from the working class, and now the real estate market is struggling to leech its share. So they’re going to try to persuade or just plain force people back into office work, not because it’s more efficient for individual firms (it’s not), but because it artificially places us in environments where a host of actors can extract rents from us—everyone from the boss to the landlord to the finance firm that issued your car loan so you could drive to work.

It’s all just so grotesquely inefficient. But that’s capitalism!

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Show threadDella (she/her)Jul 15, 2023
@HeavenlyPossum thank you! @@BlackGlitterXx check this out, we've talked about it before.
Show threadDaniel AJ SokolovJul 16, 2023

@HeavenlyPossum It's a nice article. But it misses several factors.

NYC's population is rapidly aging. That means shrinking household sizes, so fewer residents want more apartments = rising demand.

The success of the home office is bad for office real estate, but great for residential real estate. Residents who can, increase apartment size or reduce occupancy = rising demand.

Show threadDaniel AJ SokolovJul 16, 2023

@HeavenlyPossum Inflation means that some people may have to downgrade their apartments or move to a cheaper area = rising demand for some apartments.

Higher interest rate means that indebted residents may have to downgrade their apartment or move = rising demand for some apartments.

The incarcerated population in NY has fallen significantly = rising demand for some apartments.

Since COVID, there are less "road warriors". These people might upgrade apartments, etc.

Show threadDaniel AJ SokolovJul 16, 2023
@HeavenlyPossum That does not mean there is no warehousing, but I'm saying there are many factors at play.
Show threadRoy Brander🍁Jul 16, 2023

@newstik @HeavenlyPossum

That made me stop to check, and what I found does not support that theory. Google "New York City Population Projections by
Age/Sex & Borough 2000–2030"

...and you'll see that Manhattan, for instance, is projected to drop from 12.2% school-age in 2000 to 10.7% school-age in 2030. Brooklyn, 19.4 to 16.6.

3% of households having one less kid - not in the same order of magnitude as a total population loss of 5% - nearly 500,000 people - from 2020 to 2022.

Show thread(((Baslow)))Jul 16, 2023

@HeavenlyPossum

I think this dynamic enters into the picture, as well:

https://www.theb1m.com/video/why-new-yorks-billionaires-row-is-half-empty

Show threadIronskiJul 16, 2023

@HeavenlyPossum the thing is: As an politician who prefers homeoffice you have the mightiest lobbyists against you:

Real estate landlords, fossil industry profit from commuting and car industry because of less attrition of cars and many more involved or affected by employees which stay at homeoffice - even it was only for some days off workplace.

If Politicians dare to mess with those, they career will come to an abrupt end…

Show threadHeavenlyPossumJul 16, 2023

@Nachtflug

Of course! The state works for them, not for us.