The problem is not simply the use of algorithms. The problem is that the algorithm is coordinating prices for a large percentage of rented properties. It's effectively a cartel.
That's fine, if apartments are too expensive for people and landlords are penalized heavily, then the rent will come down otherwise landlords will be underwater. If tenants are still moving inspite of the high prices, then the price is probably right.
> If tenants are still moving inspite of the high prices, then the price is probably right.
Housing is a necessity. Demand for which is inelastic. The price will be paid regardless, via rent or purchase. And purchase is out of reach or unmanageable for many. Leaving rent as their only option.
Also, in no particular order and not limited to:
- Single or multi-year contracts.
- Minimum space requirements for family size
- Local social ties, extended family and friends
- Dependency or ties to local services, groups, business
That's just not true, people leave shitty landlords, buildings, and cities all the time. People also confuse housing as a necessity versus good housing in a good location as a necessity. It's normal for desirable cities to be expensive, if algorithms are truly scalping people on rent, then those cities would be less desirable and the rent would reach equilibrium.
Elasticity is a spectrum. The relative elasticity of housing demand might be best illustrated by comparing to a similarly priced good: personal vehicles. Which is more elastic and why?
If you have another appropriate or even better comparison to offer, please do.
Isn't the measure of an economic system the efficiency with which it converts resources into social welfare? In this case, renters are paying above what they would pay in a competitive market. That gap in prices is a deadweight loss to society. It's money out of consumers' pockets for zero added value.
You can see the same thing starting to happen in the domain industry. Registries are buying pricing data rather than setting their own prices, so high-value keywords end up having the same price across TLDs that should be competing with each other.
