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US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

klobuchar.senate.gov

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Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#141

Post by loeg »

Aunche wrote: post #129
loeg wrote: post #6

Earlier quoted context omitted.

The innovation here isn't the automated pricing, but convincing all the landlords in an area to collude by sharing pricing and demand data with a central organizer. Humans could do the pricing and it would still be illegal collusion.

If they are really facilitating collusion, then they would be selling a broken product. For example, for simplicity's sake, let's say that a city has a lot of landlords, but all their units are identical and they all follow the RealPage algorithm for price suggestions. Realpage suggests that they charge an exorbitant $10000 per unit, which leads to only 50% of all units being occupied, so your expected value of $5000…

Your arbitrary figure of $9,000 -> $10,000 causing a 40% drop in occupancy is wholly invented.

You could instead imagine a (still completely fictitious) figure that makes your argument look bad -- e.g., that the raise in rates causes a 0% drop in occupancy. Then the landlords/algorithm win by raising prices.

One reason occupancy rates might remain relatively stable even in the face of rising prices is if consumers have relatively few better options, because e.g. all of your competitors collude to also raise their rates similarly.

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#142

Post by admax88qqq »

ceejayoz wrote: post #115
admax88qqq wrote: post #106

Earlier quoted context omitted.

People's rent doesn't change daily

Nor do the plane tickets I bought six months ago. The price if you purchase today changes daily, in both scenarios.

Yeah fair point. I don't know what point I was trying to make.

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#143

Post by colechristensen »

missedthecue wrote: post #20
ceejayoz wrote: post #11

Earlier quoted context omitted.

Landlords banding together to use one tool to set all the prices sure sounds like a cartel.

But they aren't banding together. That's like saying devs are banding together to publish apps on the Apple App Store. There is no mechanism for keeping other landlords from leaving the software, and there are multiple competing alternatives.

I think the core of the issue is "pricing as a service" is anticompetitive and should be banned. These service providers likely siphon up tons of data (and probably sell it to other similar service providers) about the market which would otherwise be proprietary business information and are used widely across landlords.

It promotes a perverse incentive for everyone to share business information and have the same pricing models and for the model to promote rising prices consistently across all landlords.

It should be banned because the incentive structure discourages (or eliminates) competition.

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#144

Post by bombcar »

ceejayoz wrote: post #112
Aunche wrote: post #111

Earlier quoted context omitted.

Reducing rents may also maximize revenue by reducing vacancy. The reason the algorithm recommends landlords to increase rents more often than it recommends them to decrease rents is because the supply of housing isn't growing as quickly as demand. Without this algorithm, landlords tends to set rents in reactive manner, so the price they set lags behind the optimal market price, so when the algorithm recommends the ma…

> Reducing rents may also maximize revenue by reducing vacancy. Actually, the algorithm seems to do the opposite. https://www.propublica.org/article/yieldstar-rent-increase-r... > During an earnings call in 2017, Winn said one large property company, which managed more than 40,000 units, learned it could make more profit by operating at a lower occupancy level that “would have made management uncomfortable before,” h…

Those occupancy levels are insane to me - 80% used to be considered the norm when working out the cap rate. Maybe it’s different for exceptionally large properties.

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#145

Post by Aunche »

loeg wrote: post #141
Aunche wrote: post #129

Earlier quoted context omitted.

If they are really facilitating collusion, then they would be selling a broken product. For example, for simplicity's sake, let's say that a city has a lot of landlords, but all their units are identical and they all follow the RealPage algorithm for price suggestions. Realpage suggests that they charge an exorbitant $10000 per unit, which leads to only 50% of all units being occupied, so your expected value of $5000…

Your arbitrary figure of $9,000 -> $10,000 causing a 40% drop in occupancy is wholly invented. You could instead imagine a (still completely fictitious) figure that makes your argument look bad -- e.g., that the raise in rates causes a 0% drop in occupancy. Then the landlords/algorithm win by raising prices. One reason occupancy rates might remain relatively stable even in the face of rising prices is if consumers ha…

> that the raise in rates causes a 0% drop in occupancy.

Housing demand isn't really that inelastic. People will move to less crowded cities if they become too expensive. Americans tend to have much more living space per capita than most of the world, so there is a lot of room to move in with roommates or family.

> all of your competitors collude to also raise their rates similarly.

Realpage doesn't control the prices for the majority of housing in the US, the majority of rental units in the US, or even the majority of multifamily rental units in the US. If they tried to facilitate collusion, their customers would simply lose money.

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#146

Post by thriftwy »

ilammy wrote: post #123
thriftwy wrote: post #29

Earlier quoted context omitted.

If you tax second homes, people will not buy these, not put them out for rent, and developers will build fewer real estate. This may only benefit if you have already borked your real estate market so that virtually nothing gets built anyway.

> If you tax second homes, people will not buy these, not put them out for rent Which is exactly the point of the policy. If the society recognizes that private landlordship is net negative like smoking, it’s expected to be regulated out of existence. Why should people wanting to buy a second home be given priority over people wanting to buy their first, from the moral stance?

Why would society "recognize" that? What's the reasoning behind it?

What'w the criteria for it being a "private" landlordship? Can you just register a shell company? PG spent a lot of time explaining how easy it should be to register and run a company.

Are you advocating for red tape and regulatory capture here?

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#147

Post by giraffe_lady »

Aunche wrote: post #127
giraffe_lady wrote: post #119

Earlier quoted context omitted.

> Reducing rents may also maximize revenue by reducing vacancy. Yeah but come on were you born yesterday. > The reason the algorithm recommends landlords to increase rents more often than it recommends them to decrease rents The algorithm causing landlords to raise rents is the problem with the use of the algorithm , the subject of discussion. The mechanics of how the algorithm comes to that conclusion may be technic…

> What do you gain from making people think we can't or shouldn't stop this? Because they aren't doing anything illegal. They are merely facilitating price discovery. If they really were creating a cartel of landlords, then they would be selling a broken product. For example, for simplicity's sake, let's say that a city has a lot of landlords, but all their units are identical and they all follow the RealPage algorit…

Do laws come down from heaven in this view? We make them when we find that something is harmful. This is harmful. We can make it illegal.

What it could be matters for shit. What it is in practice is maximizing wealth extraction from the people least likely to be able to bear it towards those who already, necessarily, have much more of it.

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#148

Post by rtpg »

asdff wrote: post #107
rtpg wrote: post #44

Earlier quoted context omitted.

Hotels and flights are, granted, less essential than a place to live. Remember, you _have to live somewhere_. That is a functional difference compared to other "market-based" things (never mind that "market-based solutions" are a lot less workable when atomicity is lost. Yeah yeah, regulations making things harder to build, I think more should be built! But there are real, "wanted" things in the way of just having ma…

Hardly anyone says "I have $200, where can I fly." Usually its "I have to go to X for y reasons, X is already booked and paid for, lets get a flight" at which point you are extorted by the dynamic price model for a flight you must take. It's somewhat hilarious when Spirit in particular overbooks, and tries to offer you money to take a flight some other day, assuming you can just rearrange everything in your life arou…

Hey, I think dynamic pricing like that is basically BS as well, and would applaud efforts to stop a lot of that! Though a part of me wonders how much of a subsidy that stuff is to other people, I know in practice they're not differentiating between "price insensitive" and "people who really need to get to a place at a certain time".

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#149

Post by nullc »

calvinmorrison wrote: post #73
jmyeet wrote: post #32

Earlier quoted context omitted.

I distinguish between "investment property" and "second homes". An investment property is a working asset that's specifically there to generate income (eg by renting it out). "Second homes" here are really non-working assets (eg the family lake house).

but lake houses and beach houses are seasonal and have little demand year round

And usually in locations where the housing market isn't congested and where building additional units (especially if you don't care if they have a view) would be no big deal.

Re: US reps urge DOJ to investigate anticompetitive conduct affecting apartment rent

#150

Post by nullc »

mihaic wrote: post #101
jmyeet wrote: post #21

Price controls are ineffective long term but can be a useful stopgap measure in the short term. The only solution to this is dealing with supplyside issues, notably the artificial constraints on housing supply. This is longer term.So the pricing algorithms are a natural reaction to market forces. Here are some more important things you can do in the short term to increase supply: 1. Outlaw (at the local and state lev…

The fact that you're actually presenting a reasonable solution and you're being downvoted shows how much capitalist propaganda has poluted the mainstream. Either that, or the majority of people here are real estate speculators, which I very much doubt.

I think you might be reading the post differently from the people downvoting it.

Why would punitively taxing vacation homes, which are almost always outside of urban / dense-surban locations where there is little housing market congestion and where building additional housing units is straight forward -- do anything to help things?

Why would punitively taxing the "ultra-luxury housing supply" do anything substantial for the issue being discussed?

To me, these points made the post sound like a class-war rallying cry rather than an effort at reasonable solutions.

Punitively taxing housing used by the wealthy isn't going to address the issue-- even if its successful at driving them out of the area there are so few that it wont make a dent in the market.

I'm disappointed in the lack of creativity in the proposals people advance. How about in regions where density is already over some threshold large employers should be required to have at least some threshold of their role qualified office workers working remotely? Remote workers can consume less square footage (less office space, less parking) and can locate themselves outside of the highest demand locations.

Surely there must be other alternatives other than just the density treadmill. While increasing density can also be a useful tool, it has the unfortunate effect of making the property even more valuable which works counter to the goal of affordability.

In California we should end the prop 13 windfall for rental properties, and at the very least allow rental properties taxes to rise with rental rates. Current policy can create weird effects like houses where if they were sold the increase in taxes would be comparable to the current rent, which essentially locks them into being rental... and even when it's not that extreme it creates a significant advantage in favor of long-time landlords vs recent buyers.

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