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