
Can Tech Tools Make Apartment-Hunting in New York Affordable? - terryauerbach
http://www.bloomberg.com/news/articles/2016-08-17/can-tech-tools-make-apartment-hunting-in-new-york-affordable
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davidf18
Tech Tools won't solve the problem properly anymore than better and more
firetrucks and fire engines will solve a problem with fires if buildings are
built without fire extinguishers, sprinkler systems, and materials that don't
burn readily.

In other words, a much better plan would be to solve the systems problem which
is this case is the "economic rents" \-- market inefficiencies -- which use
politics to create an artificial scarcity of housing through zoning density
restrictions and overuse of historic landmark status. This use of politics to
create the artificial scarcity transfers income/wealth from the apartment
renter to the landlord.

It makes people like Donald Trump far wealthier than they'd be if we
eliminated the laws that create the artificial scarcity.

There used to be an artificial scarcity of taxicabs in NYC where the number of
taxi medallions were limited to 13,000 and the taxi medallion had a market
value $1.2 million. Then Uber/Lyft came along and the taxi medallion owners
and banks/credit unions that financed the medallion mortgages tried to use
politics to limit their use in NYC, but thankfully they failed. Now we have
lower fares (but not from taxis) thanks to Uber/Lyft and the taxi medallion
"landlord" has seen the taxi medallion value drop to $700,000 or less.

Those who are interested in further understand the issue should see works by
Harvard Economist Edward Glaeser, see the NY Daily News op-ed, "Build Big,
Bill."

Also, Financial Times Columnist who has a BS and MS in Economics, Tim Harford,
had written an enjoyable and brief book about Microeconomics called, "The
Undercover Economist."

~~~
danhak
You seem to be refuting your own argument with the Uber / Lyft example. Are
these not tech tools that undermined the rent seeking of NYC taxi medallions?

~~~
SilasX
Right, but they mainly did that by bringing lots of new supply on the market.
It would have had a much smaller effect (though still noteworthy!) if they had
simply balanced out mis-utilization[1].

The tech tools referred to in the story are only doing the latter; they aren't
adding more rentable space and so are far more limited in what they can do
about pricing or shortages.

[1] e.g. redirected taxis from long lines at major pickup points to sporadic
pickups at less common places

~~~
SilasX
Sorry, have to follow up -- I erred in that comment. If tech enabled taxis to
get better utilization, that would have increased the steady expected revenue
during each shift, and increased the medallion prices, not disrupted it.

The only similarity with Uber is that it would have made it easier to get a
ride, but the effect would still be _opposite_ of Uber with respect to
medallion prices.

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jakevoytko
It's possible to rent an apartment without paying a broker. It's more work,
but it's worth the time.

Paying a broker costs roughly a month of rent, so even if the value of your
time is $200/hour, you're coming out ahead by doing the work yourself. I've
had luck with both pay-to-play aggregators like
[http://www.rdny.com](http://www.rdny.com), as well as blind Google searching.
Friends of mine have also done free aggregators like streetyeasy, and one even
just showed up to a building and asked about free listings.

This is useful if you want to rent an apartment, not a specific apartment.
Many apartments only go through brokers. I don't think that's a good-enough
argument to go with one.

~~~
brooklyndavs
I was able rent my apartment off of craigslist from a old school Brooklyn
family. I think they did go through a broker but they also paid for the broker
fees I believe. I didn't have to pay anything to a broker.

Is there some legal requirement in New York that rentals must go through a
broker? I don't know any other city in the country that you probably will pay
a broker fee to rent an apartment. It just seems like the real estate industry
dipping their hands into the NYC rental market as a completely unnecessary
middle man. I wonder if this is because of New York's history of being
majority rentals which, until recently, was fairly unique in the US.

~~~
xapata
No, there is no legal requirement. Other big cities often have brokers.
Boston, for example, has many brokers, despite being much smaller than NYC.

Brokers serve the owner, not the renter. While it may seem like the renter is
paying the broker's fee, it's really the owner. Compare the rents of
equivalent apartments, one with and one without a broker. You'll find that the
one with a broker is "cheaper" by approximately the annualized broker's fee.
[0]

[0] My own research, randomly sampling Craigslist postings in NYC.

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infinotize
NYC broker fee problem will really take a generation until the existing
stakeholders literally die out. The deeply entrenched real estate industry
here has no incentive to change. Not all, but many (most?) no-fee apartments
are new construction "luxury" buildings (luxury == not 30+ years old) that
handle leasings themselves, and always have very high rents.

Edit: You _can_ find other no-fee aparments but it will in general severely
restrict your choices; the odds of looking for an apartment by normal criteria
(location, size, condition, amenities, price, etc) and stumbling on a no-fee
listing are low.

~~~
lobster_johnson
Many no-fee listings aren't really no-fee. It's just that the fee is baked
into the rent. I found this out when scoping out places with Nooklyn, a
Brooklyn-based broker. The landlord in one instance revealed a rent that was a
good deal lower than the one quoted by Nooklyn. Of course, you're rarely able
to bypass the broker in this manner.

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cloudjacker
In my experience, all the startups attempting to tackle these problems in a
data driven way end up poaching a bunch of brokers and agents and doing the
exact same thing as the incumbents once they realize how much money they can
make.

~~~
L_Rahman
Exactly. See Compass: [https://www.compass.com/](https://www.compass.com/)

~~~
cloudjacker
haha thats exactly who I was thinking about it, I didn't want to name names.

I remember the cognitive dissonance I was having while in their interview
process

Gotta remember to just call a spade is a spade.

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JustUhThought
Short answer. No.

The problem is there is insane amounts of money chasing a very limited pool of
real estate.

My first place in Manhattan was a sublet. Through Craigslist I contacted the
person currently on the lease and received an appointment time. I showed up to
find 15ish other people there, interviewing in groups of 4. I ended up getting
the space. Two days later I banded over first and last months rent a few weeks
in advance to moving in to a person I'd only just met, $3,000. The room was
just large enough for a twin bed and a dresser, if you stepped over the bed to
get to the dresser. And there was someone living in the living room behind a
curtain. And this is not at all unusual. And that was just my first place. Got
several other crazier stories from my 5 yrs of living in NYC apartments. I
loved every minute of it.

Technology can make apartment hunting in NYC more fair and transparent, but
not more affordable.

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j_s
[https://www.padmapper.com/](https://www.padmapper.com/) has been my go-to
even after getting in trouble with Craigslist, but it was much more useful
with that data included.

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swang
wasn't there some other article recently that stated the supply in NY is
increasing to the point of benefiting renters (less demand/more supply)?

~~~
jseliger
Yes: [http://www.wsj.com/articles/as-rental-supply-grows-
landlords...](http://www.wsj.com/articles/as-rental-supply-grows-landlords-
negotiate-1470888060), but NYC and CA have both been underbuilding for
decades; price growth has slowed and even declined by about 1%, which is an
improvement over perpetual growth, but it would take far more units to see
sustained declines towards the cost of construction. See for example
[http://www.theatlantic.com/magazine/archive/2011/03/how-
skys...](http://www.theatlantic.com/magazine/archive/2011/03/how-skyscrapers-
can-save-the-city/308387/).

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perryh2
Flip Lease is actively spamming or paying people to spam Craigslist posters
via email to use their product. I think this is a really bad form of growth-
hacking. The emails aren't even nice to read.

[0]
[https://twitter.com/perry_huang/status/765818587403554816](https://twitter.com/perry_huang/status/765818587403554816)

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oh_sigh
Another startup in this space is UpTop:
[https://liveuptop.com/](https://liveuptop.com/)

I'm not sure what their revenue model is, but I like that they let you get a
credit check done once and share it with all property owners, instead of
having to pay for each one to do a credit check on you.

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ben_jones
Or the college version:

"Lol I get that you're only here for 9 months but we only do 12 month leases
and we own 70% of the real estate property!".

My personal favorite (actually happened):

"Our software is really shitty and we can't modify the leasing dates!"

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potatolicious
Betteridge's Law applies here: no.

Or rather, tech tools in isolation won't unfuck this terrible brokerage
situation in NYC. Tech tools in combination with structural economic changes,
on the other hand, might actually do the trick.

The startup in the article (Joinery) doesn't sound like they're doing that at
all. In fact it sounds a lot like they're inserting themselves as yet another
middleman in a market with already too many layers of expensive middlemen.

Better tech and better data stands a chance of getting rid of rampant
scam/bait and switch listings, but ultimately the 15% broker fee exists for
economic and structural reasons, not technological ones.

~~~
jessriedel
Could you elaborate? Better tech and data have killed middlemen in lots of
other industries, e.g., travel agents. The middlemen exist as matching
services and hoarders of info.

~~~
SideburnsOfDoom
I can't speak for NYC, only London, which also has severe housing issues. The
basic problem is a shortage of affordable supply of something that is long-
term and immobile. So better search tools can't on their own fix that supply
issue.

~~~
davidf18
My comment to the original post explains the systems issues which has to do
with "economic rents" caused by politics used to create artificial scarcity of
housing to benefit landlords over renters.

