Speaker 1: Well, you know, I just I don't know, Sophie. I
Speaker 1: think that you're kind of being unfair when you say
Speaker 1: the audience is just terrible people and you hate them
Speaker 1: and you want to throw boiling water from a cast
Speaker 1: iron skelet on them. I don't know that that's fair, Sophie.
Speaker 1: That seems kind of mean to me. But Robert, I
Speaker 1: would never say that was a direct quote from your diary.
Speaker 1: That was that was weren't my words. That's what you said,
Speaker 1: so you can't prove that. I mean, it was in
Speaker 1: your blog. Well, who knows what's a blog it was?
Speaker 1: I remember I followed you. Wow. Wow, I feel attacked
Speaker 1: in my own podcast, my own podcast that I don't
Speaker 1: with my own two hands. Unbelievable. Welcome to behind the mastause.
Speaker 1: I guess it's Samantha big Bay. Robert evans Am slandered
Speaker 1: to a terrible degree unfair early despite having never done
Speaker 1: anything wrong never How are you doing, Samantha McVeigh. Hello.
Speaker 1: I know again I aged myself with the zango reference,
Speaker 1: so I know people are going to be like, oh
Speaker 1: my god, what is wrong with you? You're welcome. I'm
Speaker 1: really glad to throw it back at this early. Yeah, Samantha,
Speaker 1: what's what's? What is? That's that's your whole that's your
Speaker 1: whole question. What is? How is what? What is? But
Speaker 1: how is it? Yeah? Exactly how is what? And what
Speaker 1: is how? Is there an answer question? There never was
Speaker 1: a r Are you asking if she's the host of
Speaker 1: a podcast called stuff? Mom never told you? Is she? Well?
Speaker 1: Is she? This is why I keep you around, Sophie.
Speaker 1: I know that you've got this better than I do.
Speaker 1: This has been a great introduction. Robert would never have
Speaker 1: gotten there. I would have gotten there. I I love
Speaker 1: our audience, I of all of everybody the statistically speaking,
Speaker 1: So this is a podcast, it's about bad people. Normally,
Speaker 1: we're doing a little bit of a different thing today, Samantha,
Speaker 1: and I've brought you on. I've brought you on because,
Speaker 1: as I can tell right now, you exist in a
Speaker 1: black void. Based on your and I assume that that's
Speaker 1: what goes on in the heart of anybody who understands math.
Speaker 1: I feel like that was racist. Is that racist because
Speaker 1: I'm a whoa? It's because you exist within a black void? Oh? Okay, okay, Jesus,
Speaker 1: that is how we we have, like obviously for the
Speaker 1: people listening to this podcast, there's a pretty good chance
Speaker 1: they're renters. They're about third rent. Renters are about thirty
Speaker 1: six percent of households nationwide, or or renter's head thirties
Speaker 1: percent of households nationwide. Um, although those numbers are a
Speaker 1: couple of years old. I don't know if it's that
Speaker 1: was like pre pandemic. Um, do you rent or do
Speaker 1: you own? Samantha, I now officially own because we were
Speaker 1: kind of pushed out from the rental that I had
Speaker 1: because he went up by Uh. I want to say
Speaker 1: on our rent, Jesus Christ. So yeah, you have been.
Speaker 1: That's what we're talking today about why the rent is
Speaker 1: so damn high. Um, and some of the people who
Speaker 1: are responsible. We're gonna try to drill into specific people
Speaker 1: whenever possible, because that's our our bit. But I am
Speaker 1: also in my first year of homeownership. I've been a
Speaker 1: renter the first fifteen years of my adult life. UM,
Speaker 1: And for me, I don't know about you. Most of
Speaker 1: the living situations I was in were like the broadly criminal,
Speaker 1: like illegal, like like the the landlord was breaking a
Speaker 1: law and so my rent was cheaper. We actually liked
Speaker 1: to tell this story a couple of we had to
Speaker 1: like talk a City of Los Angeles inspector out of
Speaker 1: reporting fire hazards in our apartment because we were like, dude,
Speaker 1: i live a minute and a half away from santam
Speaker 1: Anka and we're paying like a thousand bucks a month
Speaker 1: for a room each, Like you gotta you gotta, like,
Speaker 1: you gotta just keep quiet, Like we'll burn to death
Speaker 1: if we burned to death. We'll risk life or death
Speaker 1: for the situation because it's cheap, because it's cheap um.
Speaker 1: But nothing is cheap anymore. It has gotten Rent has
Speaker 1: gotten higher at a ridiculous rate since the pandemic, in particular,
Speaker 1: not that it wasn't raising before, but it's really raised
Speaker 1: a lot. Say, as you just said, you just we're
Speaker 1: about to go up forty year over year. In Miami
Speaker 1: and Tampa, rent is up about fifty of its pre
Speaker 1: pandemic numbers, and nationwide, median rent has topped two thousand
Speaker 1: dollars a month for the first time ever, which is
Speaker 1: inside when I was, you know, a kid fourteen fifteen
Speaker 1: years ago living in my first apart, two grand a
Speaker 1: month is like that's a rich person's rent, Like like
Speaker 1: that's a crazy rich. But I remember going to like
Speaker 1: a friends apartment in Manhattan that was bucks a month
Speaker 1: and being like, what the funk is wrong with you people? Right,
Speaker 1: I'd be seven dollars a month for a three bedroom
Speaker 1: like UM. Now, the fact that media and rent has
Speaker 1: topped two thousand dollars a month is heavily influenced by
Speaker 1: the poll of the big cities. These are very skewed
Speaker 1: numbers that may not reflect most individual people's experience because
Speaker 1: of how big some of the big cities are and
Speaker 1: how high the rent is there. So San Francisco, Seattle,
Speaker 1: New York, Los Angeles, Miami, etcetera. Are the places that
Speaker 1: are skewing the numbers and the places where rent has
Speaker 1: surged the most. But rent is still up basically everywhere.
Speaker 1: It is currently increasing at the fastest rate since nineteen
Speaker 1: eight six UM. And one of the things that happened
Speaker 1: during the pandemic is we had all these people moving
Speaker 1: to cities that they thought would be a better place
Speaker 1: to live because it was remote work UM, which helped
Speaker 1: spread out some of the increases UM. And there was
Speaker 1: a brief period of time where evictions were tamped down
Speaker 1: on somewhat by federal rental assistants, So even though rent
Speaker 1: was rising, it was hard to kick people out of
Speaker 1: their houses. But that has started to run out this
Speaker 1: year and in eviction filings hit pre pandemic levels and
Speaker 1: in many play has exceeded them greatly. So does that
Speaker 1: have an impact. Does the impact of like what's called
Speaker 1: pandemic pricing on rent have have an influence there where?
Speaker 1: Like a lot of places, they especially in big cities
Speaker 1: such as Los Angeles, New York, they were trying to
Speaker 1: fill places, so they gave a lower price and then
Speaker 1: the next year the increase was um offensively high. Yeah,
Speaker 1: that's one of the things that experience. It's it's one
Speaker 1: of the things that's contributed to evictions some cities. It's
Speaker 1: like like Houston in particulars is one city I know
Speaker 1: where eviction rate filings are like pre pandemic levels. Like
Speaker 1: it's massively higher in a lot of cities. And this
Speaker 1: is all that hit hard with that, And immediately as
Speaker 1: as soon as it dropped, the amount of evictions that
Speaker 1: came it was absurd and obscene. Yeah, and it and
Speaker 1: that that's fed into the homelessness crisis. That's this huge
Speaker 1: political thing. And also just like thing thing everywhere in
Speaker 1: the country right now. Um, and it's you know, kind
Speaker 1: of difficult to grock an absolute numbers how many house
Speaker 1: those people and encampments and other situations, because those aren't
Speaker 1: easily recorded in federal and state statistics. But homelessness is
Speaker 1: surging in a number of American cities. And all of
Speaker 1: this is ancillary to the question why is the rent
Speaker 1: so damn high? Now, if you go to like the yeah,
Speaker 1: exactly why is there? I know we're about to go
Speaker 1: down to this. There's gonna be black Hawk mentioning, Zillo mentioning,
Speaker 1: Airbnb mentioning. Are we going down these routes. We're gonna
Speaker 1: be talking about some of these. We're gonna be talking
Speaker 1: about a number of those. This is I want to
Speaker 1: say right now. We're not gonna be this isn't going
Speaker 1: to be a comprehensive list of all of the different
Speaker 1: things affecting rent prices, focusing on some particularly bastardy ones.
Speaker 1: But we'll cover a lot of it. So please don't
Speaker 1: get on and be like, well you didn't cover this
Speaker 1: or that. It's like, yeah, man, it's a big topic.
Speaker 1: Like do you do you want us this to all
Speaker 1: be just one boring broad overview of problems. You do
Speaker 1: want us to drill into some weird, fucked up assholes,
Speaker 1: which is what we're gonna Yeah, I got time today,
Speaker 1: so let's go. Yeah. So, if you go to say,
Speaker 1: the New York Times or most other big legacy see
Speaker 1: publications to try to, like, you know, type into Google
Speaker 1: why is the rent so damn high? You'll get various
Speaker 1: versions of the same answer. And I'm gonna quote from
Speaker 1: a New York Times article here. The origins of the
Speaker 1: current homelessness crisis go back decades to policies that stop
Speaker 1: the US from building enough housing. Experts said, seven million
Speaker 1: extremely low income renters cannot get affordable homes, according to
Speaker 1: the National Low Income Housing Coalition. Now, experts like these
Speaker 1: tend to place a lot of the blame on what
Speaker 1: we call nimbies, which stands for not in my backyard,
Speaker 1: and it references the fact that in cities like San Francisco,
Speaker 1: there's a lot of like upper class liberal types who
Speaker 1: make it very hard to build anything besides single family
Speaker 1: housing because they don't like big buildings and they don't
Speaker 1: like being in a dense urban environment. Los Angeles County
Speaker 1: devotes seventy six percent of its residential land to single
Speaker 1: family homes, which is bug fuck uh. This leads to
Speaker 1: sprawling cities, which also require huge road systems, lots of parking,
Speaker 1: YadA YadA, and it leads to higher rent prices because
Speaker 1: there's simply less space to build housing. The New York
Speaker 1: Times also notes quote homeowners also often protest proposed housing,
Speaker 1: effectively blocking it. They fear that more housing, particularly for
Speaker 1: low income families, will change the makeup of their communities,
Speaker 1: will reduce the values of their home. Now in San Francisco,
Speaker 1: what David Chappelle did, supposedly, I know that was like
Speaker 1: a small blue but it was a misunderstanding. But he
Speaker 1: like blocked a housing, like yeah right, yeah, he said
Speaker 1: it was a misunderstanding. George Lucas built a bunch of
Speaker 1: low income housing specifically to funk with his neighbors, his
Speaker 1: rich neighbors. He had had like noise complaint problems with
Speaker 1: his rich neighbors as a result of like the studio
Speaker 1: he ran, so to funk with them, he built a
Speaker 1: bunch of low income housing in the neighborhood because he
Speaker 1: knew it would piss off the other rich people. That's
Speaker 1: so nice, yeah, based George lucast dot dot. Um, he's
Speaker 1: a he's a he's a perfect unproblematic king. So yeah,
Speaker 1: and there's like, are not the New York Times and stuff.
Speaker 1: They're not wrong when they say that nimbies are part
Speaker 1: of the problem. In San Francisco, there were recently a
Speaker 1: bunch of protests to stop a project to convert a
Speaker 1: hundred and thirty one room hotel in japan Town into
Speaker 1: housing for homeless people. Um, like a bunch of ships
Speaker 1: like that happens. California has about twenty three available affordable
Speaker 1: homes for every hundred extremely low income renters, which is
Speaker 1: makes it one of the worst of any state and
Speaker 1: in terms of that problem. Um, so they're not wrong
Speaker 1: when they say that, Like, yeah, the the nimbies are
Speaker 1: a problem. People pro not allowing like multi family development
Speaker 1: and lots and stuff is a huge problem. And I've
Speaker 1: reluctantly come to see that. Like they have a point,
Speaker 1: Uh I have. I don't want to I don't like
Speaker 1: living in high density areas. I would prefer to live
Speaker 1: out in the woods. Um. But but this argument is
Speaker 1: broadly broadly correct. A huge part of the problem is
Speaker 1: that there's denser cities is that we need to have
Speaker 1: denser cities with more multi family z owning and residential areas. However,
Speaker 1: there's also a lot of bullshit in the argument that
Speaker 1: The New York Times is making here and in this
Speaker 1: argument in general, because the way it tends to get pushed,
Speaker 1: and it gets pushed by people like developers and by
Speaker 1: intellectuals who take on the attitude of developers because the
Speaker 1: developers are their uncles or whatever, is that all of
Speaker 1: the homelessness problem is to blame on these liberal city
Speaker 1: policies that just aren't letting developers develop enough. Um And
Speaker 1: And while again zoning is a part of the issue,
Speaker 1: this analysis excises a great deal of the actual problem.
Speaker 1: For one thing, the whole we're not building enough housing
Speaker 1: thing tends to lay all the blame on zoning and
Speaker 1: these darn nimbies. Um. But one of the other problems
Speaker 1: is that like there's not actually people to build that housing. Um.
Speaker 1: This is this is a major problem in the industry.
Speaker 1: And I'm gonna put from a right up on NPRS website.
Speaker 1: By one estimate, the US is more than three million
Speaker 1: homes short of the demand from would be homebuyers. Pandemic
Speaker 1: related supply chain problems aren't helping. They're adding tens of
Speaker 1: thousands of dollars in costs to the typical house. But
Speaker 1: the roots of the problem go back much further to
Speaker 1: the housing bubble collapse in two thousand eight, what I
Speaker 1: call a blood bath happened, says Klaus, who's a contractor.
Speaker 1: It was the worst housing market crash. It's the Great depression.
Speaker 1: Many homebuilders went out of business. Claus was building houses
Speaker 1: in Florida when the bottom fell out. A lot of
Speaker 1: my trades people found other work, went and got retrained
Speaker 1: for new jobs, in law enforcement, all sorts of jobs.
Speaker 1: So the workplace force was somehow decimated, so more cops,
Speaker 1: less construction workers, nobody to build the fucking houses that
Speaker 1: they want to have build, which is not a problem
Speaker 1: that you can lay on zoning or nimbies. That's because
Speaker 1: we It's because there was a fraudulent like banking industry
Speaker 1: that existed to sell people's subprime loans on houses that
Speaker 1: were low quality, massive and built in terrible locations. And
Speaker 1: when that fell apart, suddenly all of these people had
Speaker 1: to find something else to do. And you can't blame
Speaker 1: that on the fucking Nimbies in San Francisco, right, I mean,
Speaker 1: there's all this conversation about funding as well as who
Speaker 1: is actually going to be able to afford it? Is
Speaker 1: it is it truly affordable in actuality, which it often
Speaker 1: winds up not being because like we we have, there's
Speaker 1: like loopholes a lot Like in Portland right now, there's
Speaker 1: a building that's supposed to be affordable housing, but one
Speaker 1: of like the deals the city gets as they get
Speaker 1: or the gives the developers that they can increase rent
Speaker 1: at a greater rate than other places could for a
Speaker 1: certain set amount of years, which like, yeah, it's all
Speaker 1: there's all these fucky ways that it affordable housing winds
Speaker 1: up not being affordable that is not due to zoning
Speaker 1: or they just back out of this. So we had
Speaker 1: a whole project here called the Atlanta belt Line, which
Speaker 1: is supposed to stretch around um our metro area, and
Speaker 1: it was supposed to build up the city, have this
Speaker 1: walkable area, maybe get a rail stage, and I don't know,
Speaker 1: all these great things, but they had to buy out
Speaker 1: a lot of the areas which is predominantly urban and therefore,
Speaker 1: you know, it wasn't it was red line. Once upon
Speaker 1: a time, and it's now valuable because it's within the city.
Speaker 1: So they bought out these houses, pushing people out the
Speaker 1: low um. But the deal they had was we're going
Speaker 1: to put in affordable housing as well. They did not.
Speaker 1: They actually backed down that they'll sub deal so much.
Speaker 1: The originators who proposed this plan created this huge plan
Speaker 1: that was gonna be a thirty year plan. It's still ongoing,
Speaker 1: by the way, multi million dollars from the city, so
Speaker 1: many things that they stepped down and said they were
Speaker 1: no longer a part of this project because it went
Speaker 1: so ugly and that people had come back with sorry,
Speaker 1: just kidding, We're not giving you this property back. We're
Speaker 1: just gonna make millions and millions and millions of dollars
Speaker 1: without any going back to the city or the people
Speaker 1: who we promised that we would help. Bad shocking. Yeah,
Speaker 1: I mean, yeah, that's that sounds like the way it
Speaker 1: tends to go. Um. So, yeah, we have this fucking
Speaker 1: financial crash and home buying eventually slowly recovers after it,
Speaker 1: but building rates never do right. They stay below normal
Speaker 1: after the crash. This continues for like, you know, more
Speaker 1: than a decade because the workers simply aren't there to
Speaker 1: buy houses. So when millennials start to hit what should
Speaker 1: have been their prime home buying years, not only our
Speaker 1: houses more expensive than they had been, but there's less
Speaker 1: houses being built. And that's again it's it's just not
Speaker 1: due to zoning. It's the result of the home building
Speaker 1: industry tanking because a bunch of people who should be
Speaker 1: in prison sold and bundled up sub prime loans. And
Speaker 1: then those same people go to people in the New
Speaker 1: York Times pretending to be experts and say, no, we
Speaker 1: gotta change the zoning so I can develop cities more.
Speaker 1: And it's frustrating that that's the only argument you tend
Speaker 1: to fucking here now. Even then, even if you like
Speaker 1: because again the New York Times, the angle here is
Speaker 1: not entirely wrong, but it also leaves a lot out,
Speaker 1: even if you're just looking at their numbers, because the
Speaker 1: numbers we see that are like, the US is missing
Speaker 1: this many million homes, right, We're short three million homes
Speaker 1: or seven million homes are if not kind of fucky,
Speaker 1: which I would argue then at least presented in a
Speaker 1: way that does not provide people with clarity as to
Speaker 1: what the numbers actually mean. When I say the US
Speaker 1: is short three million homes, which is something you here
Speaker 1: on the New York Times a lot that suggests that, like, well,
Speaker 1: there's three million people who don't have who can't get
Speaker 1: housing because of sheer lack of availability, right or at
Speaker 1: least x number of people. However, many people fit into
Speaker 1: three million homes, and that's not really true. Uh, there's
Speaker 1: a lot of people who they started, Yeah, from where
Speaker 1: are these numbers? And who? I'm kind of confused. I'm like,
Speaker 1: who actually says, all right, I've gone and taking a
Speaker 1: statistics and we figured out that yes, this amount of
Speaker 1: people need as much many houses. But do we actually
Speaker 1: have a number on how did it come up to that? Yes,
Speaker 1: we're about to get to that. I'm going to talk
Speaker 1: to It does not work the way you would think
Speaker 1: it does based on the way it tends to get summarized. Right. Um,
Speaker 1: but yeah, there's there's folks will argue, just in general
Speaker 1: that the problem is not the way it's often presented.
Speaker 1: Kevin Drum is a writer from Mother Jones and I
Speaker 1: think kind of on the more libertarian end of things
Speaker 1: with a lefty tinge. His big claim to fame is
Speaker 1: that he helped solidify the idea that there's a connection
Speaker 1: between the drop and violent crime and the removal of
Speaker 1: environmental lead, like getting lead out of gas. He's like
Speaker 1: the journalist who is big on that, And he points
Speaker 1: out that while construction never recovered after the two thousand
Speaker 1: and eight crash, that's because the crash led to the
Speaker 1: bursting of a housing bubble. And since housing was indeed
Speaker 1: a bubble in that period, why would construction have returned
Speaker 1: to the rate that it was being added at when
Speaker 1: everyone lost their minds building trash houses as part of
Speaker 1: a shell game, right, Like, maybe it's not, it's not.
Speaker 1: The problem isn't that housing construction didn't return to previous
Speaker 1: levels because those levels were insane and fundamentally based on
Speaker 1: a rationality quote. During the early aughts, housing supply grew
Speaker 1: far faster than population. After the bust, household formation caught
Speaker 1: up by around two thousand thirteen, and since then, housing
Speaker 1: supply has matched household growth and has exceeded population growth.
Speaker 1: So do we have a housing shortage? Everyone keeps saying
Speaker 1: we do, and the housing groupies keep yelling at me
Speaker 1: that my chart is meaningless, But why, it sure looks
Speaker 1: right to me. By the way, I was browsing through
Speaker 1: some O e c D stats the other day looking
Speaker 1: for healthcare information, and I happened to run into their
Speaker 1: league rankings for housing. Guess how we compare based on
Speaker 1: indicators such as rooms per house, basic facilities, and affordability.
Speaker 1: The rankers is number one in the entire O e
Speaker 1: c D group of rich countries for the year to twenty.
Speaker 1: We must be doing something right and something wrong. According
Speaker 1: to the O e c D, we rank second from
Speaker 1: last among housing affordability for low income tenants. So what
Speaker 1: he's saying is that, like, well, the evidence that like
Speaker 1: we're short on housing is weaker than the evidence that
Speaker 1: prices and housing are being jacked up and inflated. It's
Speaker 1: like the there is inflated. It's like with the grocery store.
Speaker 1: There is inflation that's affecting the price of your groceries.
Speaker 1: Those grocery stores are also making record profits because they
Speaker 1: have jacked up prices specifically to make more money with
Speaker 1: the cover of inflation. Um yeah, drums Work is quoted
Speaker 1: favorably by Brian Potter, who works in the wonky side
Speaker 1: of the construction industry and writes a popular sub stack
Speaker 1: for weirdo construction nerds who want to know about things
Speaker 1: like why has wood gotten so expensive and why did
Speaker 1: agriculture mechanize and not construction. He those are the kind
Speaker 1: of things he writes about. He's also a member of
Speaker 1: the Institute for Progress, which is a right wing libertarian
Speaker 1: shaded think tank who pushed the idea that a lot
Speaker 1: of social and political policy should be tested by being
Speaker 1: prominent people tweet shit. What I'm trying to say is
Speaker 1: that I'm not going to totally back this guy up,
Speaker 1: but he certainly knows more about construction than me. He
Speaker 1: has an angle, which is why I laid out what
Speaker 1: he writes for. But he does. He does the best
Speaker 1: job I've seen of answering the question of like, what
Speaker 1: does a statistic like we're three million houses short really mean? Quote.
Speaker 1: We'll start with some context. The US has roughly three
Speaker 1: dred and thirty million people living in roughly onety one
Speaker 1: million homes, or about point four two homes per person.
Speaker 1: This puts the U S slightly before below the O
Speaker 1: E c D average of homes per capita. One thing
Speaker 1: worth noting about this is that previous rates of homebuilding
Speaker 1: in the U S were partly driven by falling average
Speaker 1: household size. But there's a limit to how much average
Speaker 1: household size can fall. You can only add so many
Speaker 1: new households to a given population size. At the extreme end,
Speaker 1: you can't have more households than there are people. Average
Speaker 1: household size can't be less than one. And in a
Speaker 1: world where a children live with their parents until they're
Speaker 1: eighteen and be most people live with a romantic partner,
Speaker 1: and see the population isn't declining. Is a world with
Speaker 1: a higher floor on how small the average household can get.
Speaker 1: What happens if this world changes to one where the
Speaker 1: average household sizes too. In the final condition, you'll be
Speaker 1: building twice as many houses. If you add four people
Speaker 1: to the population, you're now building two homes instead of one.
Speaker 1: But to get to that second world, you need to
Speaker 1: build one hundred additional houses. Even if this process takes
Speaker 1: fifty years, that's an extra two houses per year on
Speaker 1: top of the ones you're already building, which will temporarily
Speaker 1: juice your building rate. But once you work through that backlog,
Speaker 1: you're building right will drop off. Turning back to the
Speaker 1: real world, in nineteen sixty the US had a population
Speaker 1: of a hundred and eighty million with an average household
Speaker 1: size of three point three three. By nineteen eighty, average
Speaker 1: household size had dropped to two point seven six. This
Speaker 1: means that between nineteen sixty and nineteen eighty, over five
Speaker 1: hundred and fifty thousand homes per year were needed just
Speaker 1: to keep up with changes in household size. By contrast,
Speaker 1: from two thousand one to twenty one, average household size
Speaker 1: only went from two point five six to two point
Speaker 1: five one. We thus can't infer much from the fact
Speaker 1: that US home building rates per apoda are lower than
Speaker 1: they were in the past, because we would expect that
Speaker 1: to happen at some point soon regardless are you are
Speaker 1: you do you see what he's saying there? Explain it
Speaker 1: to me because I'm trying to Yeah, this is very
Speaker 1: this is this is this is very wonky. I don't
Speaker 1: know any other way to say. But the gist of
Speaker 1: what he's saying is the average from like the the
Speaker 1: sixties to the eighties, household sizes on average got smaller,
Speaker 1: which means more people were living in more houses, so
Speaker 1: there were fewer people on average per house that the
Speaker 1: number of like people per house. By comparison, barely changed
Speaker 1: at all from two thousand and one to two one,
Speaker 1: so we didn't. It would have been unreasonable for the
Speaker 1: housing rate to continue at the same rate it had
Speaker 1: been from the sixties to the eighties, because we were
Speaker 1: not like, the household size was not decreasing by a much, right,
Speaker 1: the social changes that led to us having more smaller
Speaker 1: households had already happened, and so it would have been
Speaker 1: unnecessary housing to a large extent. Um, it's you basically,
Speaker 1: you can't infer a housing shortage by looking at housing
Speaker 1: construction rates in isolation, which a lot of people do. Um,
Speaker 1: And it's it's you know. I think the point here
Speaker 1: is that there's a lot of money in convincing you
Speaker 1: that this problem is simple and that the only thing
Speaker 1: to do is deregulate. Right, If we deregulate construction, if
Speaker 1: we deregulate zoning restrictions, that will solve the problem. Right
Speaker 1: And and what what and obviously, like Potter I think
Speaker 1: is because he does conclude that like zoning changes are
Speaker 1: one aspect of helping with the crisis that we're in
Speaker 1: right now. But the thing that he and Drum are
Speaker 1: both saying is that the people who are saying this
Speaker 1: is just about a lack of households or a lack
Speaker 1: of quote unquote affordable households aren't actually looking at the
Speaker 1: numbers as they really exist. They're they're taking like these
Speaker 1: kind of broad summaries, um, and they're trying to torque
Speaker 1: the actual numbers to say something that they don't, um,
Speaker 1: in order to make a more simple in order to
Speaker 1: present a simpler picture. Right. And it's a picture, specifically,
Speaker 1: it is a picture that reduces the problem and removes
Speaker 1: solutions like rent control and eviction moratoriums. Right, That's what's
Speaker 1: going on here. Um. And yeah, there's there's a lot else.
Speaker 1: One of the other major issues here is that And
Speaker 1: this is something that Potter points out. When we're talking
Speaker 1: about missing housing, we're not talking about a lack of houses.
Speaker 1: Like you'll hear a lot of people say there's x
Speaker 1: number of empty houses in the United States, more than enough,
Speaker 1: and and that is true, but that's not necessarily vacant housing. Right.
Speaker 1: Vacant housing is housing that is on the market and
Speaker 1: available for people to purchase. And right now, the US
Speaker 1: does have a historically low vacancy rate, so there are
Speaker 1: fewer houses like per capita, fewer houses available for people
Speaker 1: to rent than there have been in the past, even
Speaker 1: though there's plenty of actual empty houses, because if those
Speaker 1: houses aren't available to be rented, they're not vacant. And
Speaker 1: a big reason why there's so much empty housing that
Speaker 1: is not technically vacant is Airbnb. Yep. Yeah, so that
Speaker 1: is a major factor here. Yeah, yeah, and we're going
Speaker 1: to talk about that. But first, you know what's not Airbnb?
Speaker 1: Maybe we were awkward. Any of our sponsors, probably Sophie.
Speaker 1: Are we sponsored by Airbnb? Not that we would were,
Speaker 1: not that we would have approved or signed off on,
Speaker 1: but like we don't. We don't have control of the
Speaker 1: m's randomly and Airbnb. Yeah, look, if you if you here,
Speaker 1: here's what I'll say. If you hear an Airbnb ad
Speaker 1: on the podcast, um, find your nearest Airbnb rental and
Speaker 1: Hukamolotov cocktail through the window, whether or not there's people inside,
Speaker 1: it doesn't matter to us legally. This is a joke. Yep.
Speaker 1: I'm just gonna send the background here. Yeah, it's fine,
Speaker 1: it's fine, it's fine, said something on fire today. Yeah,
Speaker 1: I feel like I feel like that mean, if everything's
Speaker 1: fine with the dog in the fire, and that's my
Speaker 1: face right now. Everything's fine. That is your face right now.
Speaker 1: You know what, I'm going to enjoy this moment. Oh gosh,
Speaker 1: what a great day to be an American? When well,
Speaker 1: I did when I watched those Philly fans sliding down
Speaker 1: those greased up light poles. Every time I see Philadelphia
Speaker 1: celebrate anything, I'm proud to be in a manner. I
Speaker 1: was proud of the uh the New Yorkers at the
Speaker 1: Yankees Astros game that heckled Ted Cruz. Proud of that too.
Speaker 1: And I'm proud of Forbes for reporting on how bad
Speaker 1: airbnb s are for housing vacancy rates, and I'm gonna
Speaker 1: quote from them now. Research conducted by the Harvard Business
Speaker 1: Review across the US found that airbnb is having a
Speaker 1: intrimental impact on the housing stock as it encourages landlords
Speaker 1: to move their properties out from the long term rental
Speaker 1: and for sale markets and into the short term rental market.
Speaker 1: A separate US study found that a one percent increase
Speaker 1: in Airbnb listings leads to a point zero one eight
Speaker 1: increase in rents and a point zero to six increase
Speaker 1: in house prices. It may not seem like much on
Speaker 1: the surface, but there's a cost creep for those looking
Speaker 1: to rent long term or buy. So it's just again,
Speaker 1: I'm not saying The Times is wrong when they say
Speaker 1: that nimbies are part of the problem we have here,
Speaker 1: but be cautious whenever somebody talks about the housing shortage
Speaker 1: issue and just throws that out there or just frames
Speaker 1: it as a how to housing shortage issue, right, rather
Speaker 1: than a costs are creeping up because a bunch of
Speaker 1: different kinds of capitalists are finding new ways to fund people,
Speaker 1: which is the thing that's actually happening. Yeah. Um, Another
Speaker 1: thing that's happening is that rent, like the rent surge,
Speaker 1: and like the way it looks and stuff. And the
Speaker 1: fact that the fact that the rent surge is being
Speaker 1: attributed to a lack of housing construction and whatnot and
Speaker 1: zoning issues, Um, that's heavily skewed by outlier cities, by
Speaker 1: San Francisco. In other words, rent is increasing everywhere, right,
Speaker 1: Everyone in every city is dealing with rent prices that
Speaker 1: are surging. Rent prices that are surging in San Francisco
Speaker 1: and a couple of other big cities because of zoning issues.
Speaker 1: But rint prices in Atlanta or in Houston are not
Speaker 1: necessarily surging because of those issues, but because of how
Speaker 1: big like San Francisco and New York are and how
Speaker 1: much it their outliers, And they fucked the data up,
Speaker 1: and so the picture they present in large is not
Speaker 1: accurate to why is most people's rent raising? Right? Does
Speaker 1: that make sense? Yeah? And I'm gonna I'm gonna quote
Speaker 1: again from Potters analysis here there's essentially zero correlation. The
Speaker 1: metros with the largest rent increases had added population and
Speaker 1: added housing ratios no different than metros with smaller rent increases.
Speaker 1: For example, for instance, between two thousand and one and
Speaker 1: two thousand nineteen, the San Francisco Bay Area added around
Speaker 1: three hundred and thirty six thousand people, but only built
Speaker 1: nine thousand new housing units. This gives an added population
Speaker 1: added housing ratio of about three point five four, much
Speaker 1: higher than both the national and regional average household size.
Speaker 1: This seems like it would indicate many more households than
Speaker 1: homes got added, which we'd expect to push prices up,
Speaker 1: and indeed, San Francisco saw a rent increase of over
Speaker 1: fifty three during this period, one of the highest in
Speaker 1: the country. The problem. The Atlanta metro area saw almost
Speaker 1: the same added population over added housing ratio, but it
Speaker 1: had a much lower rent increase. Atlanta added six hundred
Speaker 1: and fifty three thousand people over the same time period
Speaker 1: and only built a hundred and eighty six thousand homes
Speaker 1: for an added population added housing ratio of three point
Speaker 1: five one, and Miami added almost five hundred thousand people
Speaker 1: but only ninety eight thousand homes for an added population
Speaker 1: housing ratio of over five. But Atlanta and Miami saw
Speaker 1: rent increases of just two and seventeen percent, respectively, So again,
Speaker 1: it's just not as simple as that number alone. And
Speaker 1: I don't know, I'm probably harping on this too much,
Speaker 1: so we're we're going to get out of the number
Speaker 1: ship now. I I apologize. I just wanted to make
Speaker 1: the point that the people who just say this is
Speaker 1: all about zoning, this is all about housing construction, are
Speaker 1: trying to funk you, right like they are trying to
Speaker 1: enable others to fuck you, and you should not take
Speaker 1: them at their word. I mean, this is the classic
Speaker 1: trick and trying to blame someone else so that the
Speaker 1: people who are actually profiting and making the most money
Speaker 1: look innocent, kind of like the whole recycling bit. We know,
Speaker 1: we know what, Like they're trying to blame the individual
Speaker 1: and severalizing these huge corporations are fucking over the environment,
Speaker 1: but they don't want to talk about it because they
Speaker 1: don't want to lose money. So this is how we're
Speaker 1: gonna we scope this. Yeah, we're going to We're gonna
Speaker 1: scope this is like there's too much regulation, not like yeah,
Speaker 1: but you guys are also jacking the prices up, right,
Speaker 1: like you're you're also like you're also like colluding to
Speaker 1: fun people over by. Yeah anyway, and you're doing ship
Speaker 1: like Airbnb, like you've done a capitalists that found a
Speaker 1: bunch of different ways to funk with housing in the
Speaker 1: last fifteen years. And it's not just a construction issue
Speaker 1: or z anyway saying that rents high because of the
Speaker 1: lack of quantity of places available, but like it's really
Speaker 1: not the case. No, otherwise it would be raising its
Speaker 1: similar rates in these other cities where the numbersome. Yeah yeah, yeah,
Speaker 1: So anyway, you can whatever umi rent you wrote that
Speaker 1: your rent is too damn high. Is too damn high,
Speaker 1: And there's a number of reasons for it. And anyone
Speaker 1: trying to say it's this one simple thing that is
Speaker 1: also really good for developers is probably trying to fuck you.
Speaker 1: So now we're going to start talking about assholes, which
Speaker 1: is fun and more more are strong suit than numbers.
Speaker 1: So the first thing you need to know about, or
Speaker 1: the first person you need to know about, is a
Speaker 1: guy named Jeffrey Roper. Jeffrey is a businessman who describes
Speaker 1: himself as a numbers nerd and formerly worked as Alaska
Speaker 1: Airlines as director of revenue management in the nineteen eighties. Now, anybody,
Speaker 1: anybody who says there are a numbers guy to you,
Speaker 1: just like them immediately. I don't know, I like, I
Speaker 1: like my accountant, the guy who does something. But if
Speaker 1: somebody like if that's their first thing that they want
Speaker 1: you to know about them, red flag, red flag flag
Speaker 1: date that person. Okay, So having the last name Roper,
Speaker 1: that makes me think of the guy who used to
Speaker 1: be Ebert's friend and probably killed him. That's my head.
Speaker 1: They mentioned anything about like their credit throwback, I'm just
Speaker 1: I'm just saying they mentioned anything about their credit score,
Speaker 1: if they mentioned anything about numbers, that they sure anything
Speaker 1: like that in their dating profile. Do not match with them. Wait,
Speaker 1: have you had someone girl put the credit score? Gosh yeah,
Speaker 1: more more more when I was more, when I was
Speaker 1: living in Los Angeles. But okay, yeah, that was a thing.
Speaker 1: Maybe maybe Lantis are not impressive, so therefore they out
Speaker 1: on purpose. I don't know, because I did not say that.
Speaker 1: That's a new one to say. All right, Robert tell
Speaker 1: us about the numbers. Get our money is what we're
Speaker 1: calling him. Actually our money. Okay, tell us about our money. Yeah, yeah,
Speaker 1: so he's a numbers nerd. He used to work as
Speaker 1: Alaska Airlines director of revenue management in the nineteen eighties.
Speaker 1: And look, Alaska is like the least shitty domestic airline
Speaker 1: that we have, but when dragging people off the plane,
Speaker 1: So yeah, they don't do that now, I will say this.
Speaker 1: They absolutely while Roper was director of revenue management, robbed
Speaker 1: us all of about a billion dollars back in the
Speaker 1: nineteen eighties. So we're gonna talk about how that happens,
Speaker 1: like robbed us consumers, like stole illegally, criminally stole a
Speaker 1: billion dollars. It's cool, Yeah, so compete. They're not the
Speaker 1: only actually with a number of airlines stole collectively a billion,
Speaker 1: but Alaska was kind of leading the pack anyway, competing airlines.
Speaker 1: What happened is competing airlines started using price setting software
Speaker 1: and they're different computers would all kind of share data
Speaker 1: on planned routes and prices with each other to make
Speaker 1: sure that like nobody was undercutting anyone else. And Jeffrey
Speaker 1: was a big part of this. He brings in price
Speaker 1: setting software to Alaska and he helps set up this system,
Speaker 1: which they're very happy with because it helps avoid a
Speaker 1: price war in the nineteen eighties. And when you frame
Speaker 1: it as a price war, it sounds like, oh, they
Speaker 1: avoided a price war with this software. That's good. No,
Speaker 1: it's not. What a price war is is companies competing
Speaker 1: to give you the best price so that you will
Speaker 1: choose their service. Right, it's good for consumers when a
Speaker 1: price war occurs. When you avoid a price war, it
Speaker 1: means you're getting fucked, right, price war amongst each other.
Speaker 1: So they cannot have to compete for businesses unless they're
Speaker 1: in like I'm guessing they're doing like the prices right
Speaker 1: type of where this's just a dollar less Yeah. That
Speaker 1: that well, that normally what would happen is you would
Speaker 1: not it would kind of be a little bit of
Speaker 1: a black box, and they would set their rates just
Speaker 1: based on this is what we think is fair, and
Speaker 1: then kind of over time as they see what consumers
Speaker 1: are choosing, you know, than like maybe we need to
Speaker 1: lower rates or maybe we can raise them a little.
Speaker 1: What they're doing with these softwares is they're all communicating
Speaker 1: with each other to be like, this is what we
Speaker 1: are charging. Oh, we can all afford to charge more,
Speaker 1: So the prices just start raising, and just start raising,
Speaker 1: and just start raising. Right. Price wars occur when corporations
Speaker 1: fight to lower prices while still staying profitable. Um, this
Speaker 1: is good, broadly speaking for consumers. If capitalism worked the
Speaker 1: way my high school textbook said it did, then this
Speaker 1: would this would be an example of why it's a
Speaker 1: good system. Right. But that's not what happens. What really
Speaker 1: happens is that companies like these airlines do things called
Speaker 1: do so what's called price fixing, which is illegal Alaska
Speaker 1: under while you know, this system that Roper helps set
Speaker 1: up is illegal price fixing. The Department of Justice says
Speaker 1: these companies are all illegally fixing prices. I'm not like
Speaker 1: declaring this price fixing because I don't like it. The
Speaker 1: Department of Justice says they did a crime. Did anybody
Speaker 1: actually get absolutely not, well a little bit so. The
Speaker 1: d o J accuses Alaska and several other airlines of
Speaker 1: artificially inflating prices using this system, which costs taxpayers about
Speaker 1: a billion dollars between nineteen and nineteen or ninety two.
Speaker 1: The government gets settlements and consent decrees out of eight airlines,
Speaker 1: including Alaska, which is like, again, when you're a big
Speaker 1: company and you have lawyers, nobody goes to prison for
Speaker 1: this ship. Sometimes you'd kick a government some money. Yeah, exactly. Now,
Speaker 1: during this investigation, federal agents remove a computer and documents
Speaker 1: from Roper's office because again he's kind of one of
Speaker 1: the ringleaders of this. He will later claim in an
Speaker 1: interview quote, we all got called up before the Department
Speaker 1: of Justice in the early nineteen eighties because we were colluding.
Speaker 1: We had no idea, of course, of course, Yeah, sure, buddy, Yes,
Speaker 1: I'm certain you had no idea what that was. Oh
Speaker 1: my god, we were price fixing. I don't know all
Speaker 1: our price fixing was price fixing. I didn't know. It
Speaker 1: seemed like we were just making a lot of money.
Speaker 1: We're just so good. It's very funny that he says that, um,
Speaker 1: nobody gets really punished again. Whatever. Whatever settlements they make
Speaker 1: are kind of slap on the wristy. After the Roper
Speaker 1: leaves the United States for Central and Eastern Europe to
Speaker 1: funk with people's lives in post Soviet Europe, he's he's helping.
Speaker 1: He's one of these capitalists who goes over there because
Speaker 1: he's like, there's a lot of money to be made
Speaker 1: in setting the stage for Vladimir Putin's rise to power
Speaker 1: by fucking with all these newly privatized industries and siphoning
Speaker 1: money and access to future money away from any kind
Speaker 1: of like regular people or social safety net that might
Speaker 1: be built, which will create ideal grounds for authoritarianism. Anyway,
Speaker 1: it's whatever, it's good. Stuff made money, he made. He
Speaker 1: makes a lot of money doing this. And then he
Speaker 1: gets back to the US and he's like, you know what,
Speaker 1: I realized, the US apartment rental industry is stuck in
Speaker 1: the past. It looks like these emerging markets over in Europe.
Speaker 1: You know, it's it's old fashioned, it's too slow. And
Speaker 1: the thing that he finds that really discusts him is
Speaker 1: that apartment managers are quote basically pricing their product on
Speaker 1: a paper napkin, which he seems to have found viscerally offensive. Now,
Speaker 1: what's going on here is that to some extent, renting
Speaker 1: is more of a human business back then, so people
Speaker 1: are like coming in and sitting down and their landlord saying, well,
Speaker 1: like this is what again? You know, there's haggling and
Speaker 1: stuff and back and forth. And you know, if you've
Speaker 1: ever haggled with a small landlord or gotten going to
Speaker 1: give you a break because like ship got sucked up
Speaker 1: in your life, you know what I'm talking about. Right.
Speaker 1: You can say what you will about how inherently predatory,
Speaker 1: you know, landlording is or isn't or whatever, But like,
Speaker 1: at the end of the day, it's better when you
Speaker 1: can be a human being sitting across the table from
Speaker 1: another human being, because sometimes that matters, right like sometimes
Speaker 1: sometimes like small landlords can be shitty and terrible too.
Speaker 1: But as a general rule, I always every time I
Speaker 1: had the least from a huge company, I found the
Speaker 1: monolithic slow to respond to problems and cruel in their
Speaker 1: application of things like fees and penalties. Where I was
Speaker 1: able to like talk shit out of little landlords. And
Speaker 1: and you know now that I never had a small landlord.
Speaker 1: Fucking steel shipped from me. But if I prefer one
Speaker 1: situation to the other, right, I think out of the
Speaker 1: twenty twenty years that I rented, one one was a
Speaker 1: big corporation and I hated it. It fucking sucks. I
Speaker 1: want to at least be able to call my goddamn
Speaker 1: landlord on the phone and get a person and deal
Speaker 1: with a problem. You know. Well I also had the
Speaker 1: agil problem where the guy who came to fix things,
Speaker 1: a maintenance man, it was hitting on me. So I
Speaker 1: hadn't just come into my house. So yeah, I had
Speaker 1: there was that I had the handyman my last yet
Speaker 1: and my last one didn't hit on me. No, no, no,
Speaker 1: he would let He would come in and lecture me
Speaker 1: about life choices and tell me about you know, he
Speaker 1: was just really misogynistic. It was I think it's it's
Speaker 1: equally bad. I had a gloriously opposite experience. And so
Speaker 1: when I was renting a slum it was legally his
Speaker 1: own servants quarters. It was one room. I lived in
Speaker 1: it with two other men. Um falling apart the ceiling
Speaker 1: collapsed on me while I was showering. Um, And the
Speaker 1: next day I called the landlord and I'm like, hey,
Speaker 1: the ceiling fell in on me. Whif I was shower well,
Speaker 1: it was like nighttime. I tend to shower like it
Speaker 1: was like it was like it was like something like that. Immediately,
Speaker 1: I don't remember if I called him. Maybe I called
Speaker 1: immediately and he wasn't right anyway, I get, I get
Speaker 1: in touch with him and he's like, i'll get I'll
Speaker 1: get my guy right over. So he sends over a
Speaker 1: repair man and he's just kind of this like old
Speaker 1: hippie looking dude and he comes over and he looks
Speaker 1: up at the hole and he's like, yeah, we're not
Speaker 1: gonna be able to fix this for a while. And
Speaker 1: then he says, do you want to buy some weed?
Speaker 1: And I said yes, And he was selling fifty dollar
Speaker 1: rounds as of pretty solid popcorn that's like mids. It
Speaker 1: was good, it was a good deal. It was worth it.
Speaker 1: It was like several months where we didn't have a
Speaker 1: ceiling over the shower, but it was a pretty good
Speaker 1: weed hook up. We were poor as ship, so a
Speaker 1: fifty dollar rounds and mids that's not a bad deal.
Speaker 1: You know, well, it must be wonderful to you. Don't
Speaker 1: get that. You don't get that experience with a big
Speaker 1: corporate landlord. That's the kind of landlord you get when
Speaker 1: your landlord is yeah, breaking a number of different laws.
Speaker 1: But basically, chill, um, look get this is I yeah again.
Speaker 1: You can have whatever Marxist opinions you want to have
Speaker 1: on landlords. I'm talking about like, from a human being perspective,
Speaker 1: it's always better to deal with a person than a
Speaker 1: giant edifice. So whatever. Um. Jeffrey Roper's entire business attitude
Speaker 1: revolves around making that kind of thing where like, if
Speaker 1: you're living on the margins, you can kind of skate
Speaker 1: by because you're able to like talk to someone on
Speaker 1: a human level. He wants to make that impossible, right,
Speaker 1: because that that is a barrier to profits. Exactly exactly,
Speaker 1: you have predicted where we're going here. So in two
Speaker 1: thousand four he gets hired by a company called real
Speaker 1: Page as its principal scientist. They bought software from Camden
Speaker 1: Property Trust, which is a large owner of apartment buildings,
Speaker 1: that was supposed to help them maximize profits. Now, pretty
Speaker 1: sleep back in the Napkin days will call him. Even
Speaker 1: big corporate apartment managers had kind of been left to guests,
Speaker 1: you know. They they Even if you were working with
Speaker 1: a big corporation, it was still kind of like eventually
Speaker 1: some guy's gonna sit down and just kind of guess
Speaker 1: what he thinks he can get out of you, right um.
Speaker 1: Roper knew that he could do better, just as he'd
Speaker 1: done in Alaska by introducing machines and price fixing to
Speaker 1: the well legally not price fixing yet, although it might
Speaker 1: prove to be price fixing in the future. We'll see
Speaker 1: what the d o J says. But legally he has
Speaker 1: not committed price fixing in the rental industry to an
Speaker 1: extent that has been proven. I'm gonna quote from a
Speaker 1: pro publica investigation. Roper quickly realized he required data, a
Speaker 1: lot of data to get the algorithm working properly. He
Speaker 1: began building a master data warehouse that pulled in client
Speaker 1: data from other real page applications, such as those releasing managers.
Speaker 1: A proof of concept version of the software had performed
Speaker 1: well in tests at townhouses Camden offered for rent in
Speaker 1: its home city in the of Houston. At the time,
Speaker 1: the street behind Camden's townhouses was shut down while to
Speaker 1: grow Shy Store was being built. Leasing staff wanted to
Speaker 1: discount rent for the town houses because of the nuisance,
Speaker 1: said Kip Zacharias, who worked with Camden as a consultant. Instead,
Speaker 1: yield Star, which is the company that's selling the software,
Speaker 1: suggested boosting rents. We were like, guys, just try it.
Speaker 1: Zacharias said. The units ended up renting for significantly more
Speaker 1: than staff and expected. He said that was kind of
Speaker 1: the Eureka moment. If you listen to your gut, you
Speaker 1: would have lowered your price. Such agents sometimes hesitated to
Speaker 1: push prints higher. Roper said they were often peers of
Speaker 1: the people they were renting to. We said, there's way
Speaker 1: too much empathy going on here. This is one of
Speaker 1: the reasons why we wanted to get pricing off site,
Speaker 1: unimpeded by human worries. Yield Stars price increases sometimes yet
Speaker 1: led to more attendants leaving. So He's literally is saying
Speaker 1: what you were saying. There's too much empathy in the
Speaker 1: process as it exists. We gotta get rid of that
Speaker 1: ship so we can really fuck people right right. We
Speaker 1: need We need to get all the human aspect. I
Speaker 1: like that, don't be human if you're or if you're
Speaker 1: just a person at a leasing office with discretion and
Speaker 1: a person comes in and they're like, you know, they
Speaker 1: reminding your mom and your aunt, your cousin and your friend,
Speaker 1: or like you know you have a good rapport with them,
Speaker 1: They're like, yeah, I want to make sure you get
Speaker 1: a good deal, like I work. Again, I've had that
Speaker 1: happen to me. Um It's it's like this is and
Speaker 1: and the system, by the way, that system that when
Speaker 1: I'm describing was not idyllic. It was still Badrick was
Speaker 1: still too high, but this has made it much worse. Right,
Speaker 1: So he's the one that began like, no, really, every
Speaker 1: year you should increase and they'll never question it. We
Speaker 1: just do it to every single person uniformly, and then
Speaker 1: you know, nobody's it's not personal. This is just the
Speaker 1: price of housing now, and this is just the way
Speaker 1: that it works. And you know, we're just trying to
Speaker 1: We found that you're underneath the the and this is
Speaker 1: what it means. Also, when like you get that letter
Speaker 1: saying you know your house is under priced or lower
Speaker 1: than like market value or whatever, so we have to
Speaker 1: increase it by x amount. That's what the value they're
Speaker 1: quoting on is the ship that this software hands them,
Speaker 1: which is not necessarily a real thing. It is a
Speaker 1: thing that the machine calculated by doing a machine version
Speaker 1: of price fixing. That again, as of yet has not
Speaker 1: been ruled to be price fixing by the d o J,
Speaker 1: but may prove to be ruled price fixing by the
Speaker 1: d o J in the near future. We'll see, okay.
Speaker 1: Camden noted their turnover was about fifteen percent higher in
Speaker 1: two thousand six after it started using yield Star, which
Speaker 1: is again that's the software that Roper is managing. Despite this,
Speaker 1: revenue grew by seven point four percent, So fifteen percent
Speaker 1: of their of their clients like leave the apartments that
Speaker 1: they're in, or more of the clients leave their apartments
Speaker 1: that year, like don't renew their leases. But revenue still grows.
Speaker 1: And that all sounds fine when you treat it like numbers,
Speaker 1: right that like, oh, we had more turnover the number,
Speaker 1: but revenue still grew. But that fifteen percent of tenants
Speaker 1: who turned over includes people who got evicted because they
Speaker 1: couldn't pay their rent and people who had to leave
Speaker 1: a neighborhood or even a city they loved because had
Speaker 1: been priced out. And it also the added rent that
Speaker 1: these people paid. The reason why profits were still up
Speaker 1: means money those tenants aren't spending elsewhere money, They're not
Speaker 1: saving for a house themselves or contributing to the local economy,
Speaker 1: rather than pumping more cash into a massive corporation whose
Speaker 1: shareholders all live far away from the communities where this
Speaker 1: decision is impacted. Yep Rick Campo of Camden Property Trust
Speaker 1: is one of the people who doesn't see things this way.
Speaker 1: He summarized the impact of yield Star like this. The
Speaker 1: net effect of driving revenue and pushing people out was
Speaker 1: ten million dollars in income. I think that shows that
Speaker 1: keeping the heads and beds above all else it's not
Speaker 1: always the best strategy. Wait, yeah, man, we put some
Speaker 1: people on the street, but we made ten million dollars
Speaker 1: the people. It's funny. So pro Publica does this big
Speaker 1: investigation and they're the ones who bust this story. They
Speaker 1: find this quote from Campo where he's like, heads and beds,
Speaker 1: fuck it. Uh, and they're like, hey, this this kind
Speaker 1: of makes you sound like a monster, kind of I think, yeah,
Speaker 1: I'm gonna quote from their article Campo Toad Pro Publica.
Speaker 1: It sounds awful and doesn't reflect how here Camden views
Speaker 1: renters today. We fundamentally believe our customers and the most
Speaker 1: important part of the business, he said. We're not about
Speaker 1: pushing people out. Of course, you think customers are important,
Speaker 1: They're the ones you're jacking money from. Like customers are
Speaker 1: important to Camden the way somebody with a nice watch
Speaker 1: is important to a man with a handgun and a
Speaker 1: fucking desire to get a fixed by robbing him at gunpoint. Like, yeah,
Speaker 1: that guy is important to him. The liquor store I
Speaker 1: might rob later tonight is important to me. And this
Speaker 1: is that same level of like child up twinning kid
Speaker 1: children to work and you're like, yeah, about what you
Speaker 1: think it is in their excuses, Like no, but if
Speaker 1: the children didn't work for low wages, their family wouldn't
Speaker 1: have any money. We're doing a good thing, We're helping
Speaker 1: him out. Um yeah, it's it's it's ghoul logic, and
Speaker 1: it's I also, I don't want to I don't want
Speaker 1: to be unfair here and compare a guy like Rick
Speaker 1: Campo to somebody who robs people at gunpoint or holds
Speaker 1: up liquor stores because that individual robbing people at gunpoint.
Speaker 1: You're holding up liquor stores. That's honest work, right you know? Yeah, no, no, no,
Speaker 1: that's it's unfair to the guy with the person who
Speaker 1: was desperate and trying to get anything. All right, I
Speaker 1: got you down. I'll take that. Yeah, I'll take that.
Speaker 1: And again, that's a human interaction as a general where
Speaker 1: you can probably talk your way out of the worst. Yeah. Yeah,
Speaker 1: it's not an algorithm deciding whether or not you get
Speaker 1: stuck up, you know, because you know it's not heads
Speaker 1: and beds. Yeah, exactly. Um, speaking of heads and beds,
Speaker 1: we sell a lot of mattresses on this podcast, we do,
Speaker 1: but I have yet to give one. Yeah. Yeah, they're
Speaker 1: not get like they used to. That's what I'll say. Yeah, sounds,
Speaker 1: let's get to ads. We're back. Uh good times. So
Speaker 1: Campo Rick Campo by the way, asshole name that's a
Speaker 1: jeris right, you can tell fucking Rick Campo. You know, Rick,
Speaker 1: your job is selling time shares in Florida to elderly
Speaker 1: people with dementia who don't know where they are. Like,
Speaker 1: that's what you do. Radio personality that just screams at
Speaker 1: people and then tries to like he's not a racist asshole. Yeah,
Speaker 1: Rick Campo, the guy whose job is to get up
Speaker 1: at six am and say the in word before playing um.
Speaker 1: So obviously he says that they're not about pushing people out.
Speaker 1: But that is objectively what the software did, and it
Speaker 1: began to take off like wildfire in the real estate industry,
Speaker 1: which led to articles about it like this in the
Speaker 1: landlord focused news website yield pro. Yields is the profits
Speaker 1: you jack out of people for housing which they will
Speaker 1: die without. Yeah, so here's them writing about this positively.
Speaker 1: Equity Residential which completed installation of l r So l
Speaker 1: r O is the other kind of software. There's the
Speaker 1: yield Star and there's l r RO. There's the two,
Speaker 1: and they both do this. They're both competing at this point,
Speaker 1: competing software, so it's talking about both of them. Equity
Speaker 1: Residential which complete completed installation of l R RO across
Speaker 1: across its hundred and sixty five thousand, seven hundred and
Speaker 1: sixteen unit portfolio and Q four two thousand six found
Speaker 1: it extremely useful. Through the turning point in the apartment market,
Speaker 1: we've raised rents hundreds of dollars in some markets. And
Speaker 1: I don't think people on site, given the way we'd
Speaker 1: trained them to think about pricing, would have had the
Speaker 1: courage to push it as aggressively as this program has,
Speaker 1: CEO David neither Cut told panelists during a Deutsche Bank
Speaker 1: conference in January. Keith Odin, Camden Property Trust President and CEO,
Speaker 1: agreed it's not in their DNA to raise pricing a
Speaker 1: hundred and fifty to two hundred dollars per unit on
Speaker 1: a lease turn. He said. Camden completed roll out of
Speaker 1: yield Star across its sixty four thousand, three hundred and
Speaker 1: eighty four unit portfolio in the Q four two thousand five.
Speaker 1: Both Camden and Equity so far report one lifts to
Speaker 1: net operating income that they attribute to the use of
Speaker 1: yield Star and l r OH respectively. And again this
Speaker 1: is the very start of it. Because these these algorithms,
Speaker 1: the way they work, like any other algorithm, they get
Speaker 1: more effective at the thing they do the more often
Speaker 1: they do it, the more data they get right. So
Speaker 1: that's again, they get better at raising rent by more
Speaker 1: the longer they're doing it, and the more they I'm guessing,
Speaker 1: and the more they are rented, like raising the prices
Speaker 1: as it gets higher and higher, they're going to use
Speaker 1: that as all prices everywhere else, right because again they're
Speaker 1: price fixing, but not legally, so don't sue us. Yeah,
Speaker 1: I just wanted to say everything that you name, the corporations,
Speaker 1: individuals are all the bad guys in history of the
Speaker 1: world right now, So yeah, these are bad guys. Yes.
Speaker 1: So if you are currently in an apartment complex that
Speaker 1: you've seen your rise by a surprising amount, you want
Speaker 1: to look into whether or not your landlord uses l
Speaker 1: r O or yield Star. And while many companies don't
Speaker 1: use these programs, the fact that they're in use in
Speaker 1: major markets increases pricing for everybody. As one real estate
Speaker 1: executive told Yield pro in two thousand seven, a rising
Speaker 1: tide lifts all boats. The way Jeffrey Roper sees it,
Speaker 1: landlords who don't jack their prices up are ripping off
Speaker 1: all the other landlords. Quote, if you have idiots undervaluing,
Speaker 1: it costs the whole system, which is the same logic
Speaker 1: that led to the price fixing ga with the airlines. Right. Yea,
Speaker 1: my face is turning red. My face is turning red.
Speaker 1: Is this dark void of mind. My face is turning.
Speaker 1: Why anybody who says they're a numbers nerd, because it's
Speaker 1: one of those things if you've got if this guy's
Speaker 1: logic is being I don't know, if he's like works
Speaker 1: for a company that makes premium bourbon, right, and like
Speaker 1: he's he's applying this logic to like get the most
Speaker 1: profits out of people who want to buy nice bourbon whatever, right,
Speaker 1: Like it's discretionary, and people die if they don't have housing. Like, yeah,
Speaker 1: because a lot of this house, these houses that are
Speaker 1: for red who are with the more personable, are probably
Speaker 1: not in its safet. Yes, the fire hazards like half
Speaker 1: of the houses I lived in when I was a
Speaker 1: renter exactly, Like there's so many things like that happened,
Speaker 1: and you're like, you literally are giving up safety for
Speaker 1: the price once again, as you would say, you're like,
Speaker 1: you know, I'm living in a place that doesn't wanted
Speaker 1: in a nice neighborhood for nothing, you know, or not
Speaker 1: that that was not a particularly nice later on, not
Speaker 1: that we connect now it was okay, Um, so the
Speaker 1: way Jeffrey Ropers sees it, Yeah, so anyway, initially Roper's competition,
Speaker 1: and this horrible business was l r O or Lease
Speaker 1: Rent Options, right. I quoted about them earlier, but yield
Speaker 1: Start purchased l r O in two thousand seventeen with
Speaker 1: the Justice Department's acquiescence. They were flagged for high level
Speaker 1: review but ultimately passed pro publica rights. The approval allowed
Speaker 1: Real Page to acquire its only significant competitor, Roper said,
Speaker 1: adding I was surprised the d o J let that
Speaker 1: go through. So did I say, are you really surprised,
Speaker 1: like those organizations bought that we? I mean, that should
Speaker 1: tell you what a fucking scam this is? Right? That
Speaker 1: like even he's being like, yeah, man, I can't believe
Speaker 1: they didn't call that price fixing. I can believe they
Speaker 1: said that wasn't monopolies. It's fucked up what we did.
Speaker 1: So Real Page was pricing one and a half million units,
Speaker 1: and the acquisition of l r OH would double that. Uh.
Speaker 1: Steve Win Real Pages CEO at the point, at that
Speaker 1: point set into two thousand seventeen investor conference, I don't
Speaker 1: think there's any concentration enough concentration of buying or pricing
Speaker 1: power here to warrant the d o J stepping in Um. Yeah,
Speaker 1: so that's cool. Um And uh they made a lot
Speaker 1: of money Real Pages influence that year, like um. They
Speaker 1: The firm's target market was multi family buildings with five
Speaker 1: or more units UM, made up nineteen million of the
Speaker 1: nation's forty million units UM, and a huge share of
Speaker 1: those buildings were owned by firms backed by Wall Street investors,
Speaker 1: who are the first adopters of this pricing software. Right,
Speaker 1: so he is he is specifically going to jack up
Speaker 1: the pricing of like housing for families that is traditional,
Speaker 1: like should have been more affordable. Right, Like he's he's
Speaker 1: actually directly this business directly is targeting and jacking at
Speaker 1: the prices of what we call affordable housing. Again, not
Speaker 1: all his owning issue. So real Page renamed its combined
Speaker 1: pricing software AI Revenue Management, and by the end of
Speaker 1: twenty the firm was reporting in an SEC Commission filing
Speaker 1: that its clients used its services and products to manage
Speaker 1: nineteen points seven million rental units of all types, including
Speaker 1: single family homes. The private equity firm Tom Bravo brought
Speaker 1: the company public a few months later for ten point
Speaker 1: to billion dollars. And again, it's all that's all, that's
Speaker 1: enough to affect everyone, right, twenty million houses units, that's
Speaker 1: enough to raise everybody's rent price. And named Kimden, so
Speaker 1: are talking about the Camden to apartment complexes that are everywhere. Yes, yes, okay, okay,
Speaker 1: they brought this monster software into the world, like listening
Speaker 1: right there. Burn it down, yeah, burn burnt down, burn
Speaker 1: it down. Um, it's it's cool, so cool cool, the
Speaker 1: good the good stuff is that I don't know. Um. Basically,
Speaker 1: the attitude these companies were able to realize because of
Speaker 1: this software is that previously, even though they all always
Speaker 1: wanted to get as much money as they could have people,
Speaker 1: the number one priority was keeping occupancy full. Right, So
Speaker 1: we'll make deals with people, will cut prices if we
Speaker 1: can get another person another unit, right, because the worst
Speaker 1: thing is an empty unit, right, An empty unit is
Speaker 1: just a total waste of money this software and Roper
Speaker 1: comes in, and Roper's attitude is, no, it's not empty
Speaker 1: units are fine as long as we're jacking up the
Speaker 1: prices of other units more if we have to keep
Speaker 1: more units empty. As long as we're getting more total
Speaker 1: money out of the built the complex, that's all that
Speaker 1: fucking matters. Um. And what this actually means in in
Speaker 1: reality is that people are winding up on the street
Speaker 1: or they're being forced to move or forced to double
Speaker 1: and triple up somewhere else just to survive. And profits
Speaker 1: still raised for the company because everyone who gets to
Speaker 1: stay in housing is just getting built for more money.
Speaker 1: And one analysis pro Publica did if a building owned
Speaker 1: by a company that used yield Star next door to
Speaker 1: a building that didn't rent for the yield Star building
Speaker 1: rose since two thousand twelve as opposed to thirty three. So, like,
Speaker 1: these are substantial increases. And you've got to also admit
Speaker 1: or a note that like the average and that like
Speaker 1: the gap between yield Star and non yield Star buildings
Speaker 1: is higher because the average rental price is also being
Speaker 1: affected by the fucking yield Star price. Right, Like, it's
Speaker 1: not just that yield Star buildings are higher than non
Speaker 1: it's that they're raising rental prices for everybody because the
Speaker 1: whole market is. Because that's the conversation is that, yeah,
Speaker 1: these look well, I say, that's this all inclusive maintenance
Speaker 1: apartment complexes. They have their steady prices with no negotiations.
Speaker 1: But even though they're significantly higher, whatever you were paying
Speaker 1: with these mom and pop landlords is still going to
Speaker 1: increase because no matter what, even if it was like
Speaker 1: let's say it's cheap eight doing is still significantly cheaper
Speaker 1: thanment that that's gone in. So it sounds cheaper, which
Speaker 1: is what's happened everywhere. Yeah, because the form is that
Speaker 1: I left literally is cheaper than everywhere in Atlanta. But
Speaker 1: it's still went exactly. So everything's good. It is it
Speaker 1: fee that's good. Things are fine. We should everything. It
Speaker 1: should always be acceptable to turn things that to turn
Speaker 1: pricing for things that people die without into a fucking
Speaker 1: algorithm game, just like everything else that's terrible in our society. Um,
Speaker 1: people die, and like risk, there's the safety for white
Speaker 1: men to get continue to get rich. That's amazing. I
Speaker 1: love that. That's my favorite thing to do. You know,
Speaker 1: it's not just white men. You have to assume they're
Speaker 1: not all white, you know. So that's fine, that's true,
Speaker 1: that's true. Yeah, it's good. So anyway, we're gonna talk
Speaker 1: about an even more entertaining piece of ship next episode,
Speaker 1: and we're going to talk about some other important stuff
Speaker 1: including uh which call it rent control. But yeah, that's
Speaker 1: those are oh yeah, yeah. In some places, although yeah,
Speaker 1: there's some fun going on there too, but yeah, this
Speaker 1: is uh. These are some of the assholes who have
Speaker 1: made rent be so damn high. And also the assholes,
Speaker 1: the assholes who because the assholes in this that you know,
Speaker 1: Roper is the one we're really digging into this episode,
Speaker 1: but other assholes are just like all of the journalists
Speaker 1: who blithely report like, well, experts say there's just not
Speaker 1: enough housing and we have to change voting. It's like, no, no, no,
Speaker 1: not that that's not part of the issue, but don't
Speaker 1: pretend that that's everything that's going on, you fucking dishonest pricks.
Speaker 1: I'm gonna have to go run or something. And what
Speaker 1: do what do I do? Yeah? I don't know, go
Speaker 1: rent a house. Everybody go out and sign a lease.
Speaker 1: I quit? Yeah, Sam, anything you wanna you wanna plug? Oh? Sure,
Speaker 1: um let me get gather my thoughts. Yes, you can
Speaker 1: come find me at my podcast with Annie stuff. Mom
Speaker 1: never told you if you like to talk about feminist
Speaker 1: issues where you want to rage about how the US
Speaker 1: hate women. Um, a lot of people hate women apparently
Speaker 1: in general, and those who identify as female, you know,
Speaker 1: they think they do essentially or any issues dealing with
Speaker 1: those who identify as female. Come on over, let's to us. Um. Yeah. Also,
Speaker 1: you can find me on Instagram McVeigh dot sam or
Speaker 1: on Twitter I believe McVeigh Samantha. Yeah, you can see
Speaker 1: pictures of my dog. Well, go with christ my children,
Speaker 1: and we'll be back for for a part two on Thursday.
Speaker 1: Hell yeah, well maybe let's just happen o Goodbye. Behind
Speaker 1: the Bastards is a production of cool Zone Media. For
Speaker 1: more from cool zone Media, visit our website cool zone
Speaker 1: media dot com, or check us out on the I
Speaker 1: Heart Radio app, Apple Podcasts, or wherever you get your podcasts.