Mastodawn

Eli Van Zoeren Jul 18, 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.

1/7

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

HeavenlyPossum Jul 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

2/7

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

HeavenlyPossum Jul 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/

3/7

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

HeavenlyPossum Jul 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/

4/7

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

HeavenlyPossum Jul 15, 2023

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.

5/7

HeavenlyPossum Jul 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

6/7

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

HeavenlyPossum Jul 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!

7/7

Della (she/her)Jul 15, 2023

@HeavenlyPossum thank you! @@BlackGlitterXx check this out, we've talked about it before.

Daniel AJ Sokolov Jul 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.

Daniel AJ Sokolov Jul 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.

Daniel AJ Sokolov Jul 16, 2023

@HeavenlyPossum That does not mean there is no warehousing, but I'm saying there are many factors at play.

Roy 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.

(((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

Ironski Jul 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…

HeavenlyPossum Jul 16, 2023

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

Spongefile Jul 16, 2023

@HeavenlyPossum Amazing. You’re more likely to eat well (food from your own kitchen) and exercise (take a stretch break or do crunches without coworkers staring at you) if you’re home.

HeavenlyPossum Jul 16, 2023

I have to work in an office, but I recently had two weeks to work from home to take a training class. Amazing two weeks. More time with my family, exercised every day, made fresh meals for myself daily. I miss it. What a shit show.

Bella Ciao appreciator Jul 16, 2023

@HeavenlyPossum @spongefile I’ve been working from home full time for the past two and a half years. Did somewhat throughout the first year of the pandemic as well. Don’t miss the office, but when I don’t get outside much it definitely messes with my head. It’s not healthy the lack of social contact but then I (and all of us) need more free time to do that outside of the office.

Baron Vonskinnback Jul 16, 2023

@HeavenlyPossum I remember asking my boss in my last job if I could buy a new chair to ease my sciatica, he just laughed & said "if I buy you one they will all want one" I left that company to work from home in 2019, my sciatica is virtually gone now, businesses don't care if you are comfortable or not, they care about money, it is your responsibility to care for yourself, because you are the one who pays the price for not doing so.

HeavenlyPossum Jul 16, 2023

They’ll take better care of a copy machine than they will you. Labor is unique among the factors of production in that we and we alone are expected to maintain ourselves as productive inputs at our own cost.

Baron Vonskinnback Jul 16, 2023

@HeavenlyPossum this happened after I had just saved the business over £20k by upgrading/refreshing their entire IT fleet & cabling (which was not my job) as well as achieving an ISO27001 accreditation through implementing a full IT security reimagining & writing the policy documentation, they also turned me down for a pay rise, I was out of there within 3 months. It was a great experience for me & I am still in contact with them & I still do private work for them, but my day rate is quite high.

Seth McCarthy Jul 15, 2023

@HeavenlyPossum but where is 4, 5, 6, and 7 of 7?

HeavenlyPossum Jul 15, 2023

@tallseth 🤷‍♂️ should be there…not sure what’s wrong

John Harris Jul 16, 2023

@HeavenlyPossum
I remember the stories, when Circuit City went out of business, of them destroying expensive electronics rather than sell them at a deep discount.

LisPi Jul 15, 2023

@HeavenlyPossum > 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:

You know, this sounds like #collusion and #PriceFixing as a service.

I wonder who's liable? The users? The provider? Both?

HeavenlyPossum Jul 15, 2023

I can’t speak to the legalities of it, but yeah, this is how capitalism generally works

LisPi Jul 15, 2023

@HeavenlyPossum Yeah, given their capture of the legislative system I'm not particularly optimistic they'll get the comeuppance even the current laws say they should be getting.

Bella Ciao appreciator Jul 16, 2023

@lispi314 @HeavenlyPossum it’s not even so much their capture of the legislative system so much as the existence of the legislative system itself-the state begets capitalism and capitalism begets the state. To abolish one requires the abolition of the other.

Hisses with Geese 🌱Jul 16, 2023

@HeavenlyPossum we have some of the former execs and manager from this skeevy company. Skeevy is as skeevy does, doesn't fall far from the tree, etc.

Seán Fenian Jul 15, 2023

@HeavenlyPossum having now read ther article, this looks to me like a massive price-fixing scheme at RICO-statute levels.

ophiocephalic 🐍Jul 15, 2023

@HeavenlyPossum
Thanks for this thread; this reality is evident in San Francisco, where property hoarders are holding as many as 60,000 housing units off the market (in a city of 900,000!), and the singular agenda of the mafia that passes for the city's political class is the matter of real estate values in the Financial District

JohnW Jul 15, 2023

@HeavenlyPossum Great read, thank you! And this is happening heavily in Denver and all the suburban towns across the Front Range.

Gregory Jansen 🌹🌷Jul 16, 2023

@HeavenlyPossum I was waiting for the RealPage reference throughout reading this. Seems like an opportunity to squat on unoccupied floors in NYC! Seriously though, price collusion in real estate is algorithmically juiced now. Should be made clearly illegal ASAP.