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Algorithmic rent-pricing litigation expands under new state and local laws

morganlewis.com

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Re: Algorithmic rent-pricing litigation expands under new state and local laws

#21

Post by Espressosaurus »

dataflow wrote: post #13
sophrosyne42 wrote: post #11

Earlier quoted context omitted.

They would. But second order effects ensure that this very act leads to the decline of housing prices. These effects being eliminated by rent control makes it the premier anti-tenant policy.

What second-order effects...? Feels like such an oddly opqaue way to talk about them. And how do you ignore the effect of the fact that rent no longer rises during the life of the tenant, making it lower after a while than it would otherwise be...? (How) is it so obvious that that is dwarfed by the second-order effects of uncontrolled rent that it doesn't even warrant a mention? Because it isn't to me.

If rent no longer rises then the profit doesn't rise commensurately with demand, so the money isn't there to build supply.

Rent control crushes supply to the degree that the rent control caps rents below the actual market rate.

If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline.

Rent fixing is the other side where supply is manipulated to extract the maximum profit. In this case the coordinated rent pricing action behaves like an oligopoly.

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#22

Post by [deleted] »

oopsieDayz wrote: post #16
petesergeant wrote: post #14

Earlier quoted context omitted.

Every rental unit in the city I live in is rent controlled — the government sets a maximum rental increase per unit per year. This is here in the People’s Republic of … checks notes … Dubai. It works great.

[flagged]

[deleted]

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#23

Post by tyre »

Aurornis wrote: post #19
Chinjut wrote: post #9

Earlier quoted context omitted.

Why would landlords not seek the highest possible rent without rent control?

Under rent control the highest possible rent is set by laws. If you fall behind on the allowed rent increase you’re usually not allowed to catch up to market rate later, such as when your tenant leaves and you put the unit back on the market. So to avoid getting stuck at below market rate with no legal way to catch up, you have to take the maximum allowable rent increase every year. In some situations it’s better to…

I live in NYC, which has rent control, and the idea that a landlord would otherwise lower rent is hilarious.

Landlords raise rent by the max allowed because they can. There is no “catch up” because the purpose is to protect renters against huge jumps.

I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent. You can own property to rent out, but in a city with a tremendous shortage of housing, you need to rent it out.

I lived in a building with affordable housing units and management decided they would rather not rent them out at all. Horrible.

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#24

Post by tyre »

Espressosaurus wrote: post #21
dataflow wrote: post #13

Earlier quoted context omitted.

What second-order effects...? Feels like such an oddly opqaue way to talk about them. And how do you ignore the effect of the fact that rent no longer rises during the life of the tenant, making it lower after a while than it would otherwise be...? (How) is it so obvious that that is dwarfed by the second-order effects of uncontrolled rent that it doesn't even warrant a mention? Because it isn't to me.

If rent no longer rises then the profit doesn't rise commensurately with demand, so the money isn't there to build supply. Rent control crushes supply to the degree that the rent control caps rents below the actual market rate. If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline. Rent fixing is the other side where supp…

If rents can’t rise quickly, then the expected profit of a building goes down, which means prices for land go down, which means it is cheaper to build, which means it balances out.

If the balance is far enough off that everything turns into commercial real estate, that can be solved, too.

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#25

Post by tyre »

lotsofpulp wrote: post #17
dataflow wrote: post #13

Earlier quoted context omitted.

What second-order effects...? Feels like such an oddly opqaue way to talk about them. And how do you ignore the effect of the fact that rent no longer rises during the life of the tenant, making it lower after a while than it would otherwise be...? (How) is it so obvious that that is dwarfed by the second-order effects of uncontrolled rent that it doesn't even warrant a mention? Because it isn't to me.

Prices are a signal, and price changes are how market participants can determine which way supply and demand curves are moving. By legislating prices and price changes, the signal is muddied, and market participants cannot take action to match the movements of the supply and demand curves. Prop 13’s property tax rate increase cap is also price fixing. These kinds of laws are mostly ways to enrich and reward those who…

When people are trying to afford living, “price transparency” is not the most helpful thing a government can provide.

I agree that Prop 13 is god awful.

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#26

Post by Aurornis »

tyre wrote: post #23
Aurornis wrote: post #19

Earlier quoted context omitted.

Under rent control the highest possible rent is set by laws. If you fall behind on the allowed rent increase you’re usually not allowed to catch up to market rate later, such as when your tenant leaves and you put the unit back on the market. So to avoid getting stuck at below market rate with no legal way to catch up, you have to take the maximum allowable rent increase every year. In some situations it’s better to…

I live in NYC, which has rent control, and the idea that a landlord would otherwise lower rent is hilarious. Landlords raise rent by the max allowed because they can. There is no “catch up” because the purpose is to protect renters against huge jumps. I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent. You can own property to rent out, but in a…

> I think rent controlled units that sit empty should be subject to a tax based on an escalating percentage of the market rent

They would just be taken off the market and then relisted later.

Forcing people to rent their properties and also forcing the price isn’t something I can get behind. People need to be able to choose what they do with their property.

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#27

Post by lotsofpulp »

tyre wrote: post #25
lotsofpulp wrote: post #17

Earlier quoted context omitted.

Prices are a signal, and price changes are how market participants can determine which way supply and demand curves are moving. By legislating prices and price changes, the signal is muddied, and market participants cannot take action to match the movements of the supply and demand curves. Prop 13’s property tax rate increase cap is also price fixing. These kinds of laws are mostly ways to enrich and reward those who…

When people are trying to afford living, “price transparency” is not the most helpful thing a government can provide. I agree that Prop 13 is god awful.

These side effects of these dynamics are not going to be evident or resolved in the short term. It took decades for prop 13’s (and other effects) to compound and become visible, and it will take decades to undo.

There is no shortcut though, the incentives have to be set right, and there has to be patience for the results to show. Unfortunately, long term benefit at the expense of the short term is a core weakness in democracy.

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#28

Post by s1artibartfast »

Chinjut wrote: post #9
aorloff wrote: post #7

In the People's Republic of Berkeley, our City Council patted themselves on the back in March 2025 when they passed similar laws. Then they got sued by the company that was targeted, and immediately waffled and canceled the ban. What's insane about all of this is that we also have Rent Control. There is no greater price fixing mechanism than Rent Control. Rent Control ensures that all landlords must seek the highest…

Why would landlords not seek the highest possible rent without rent control?

You might prefer to have the vacancy filled faster rather than waiting for the highest possible price. These algorithmic pricing cases kind of revolve around this concept. It is the value that the service provided the companies.

Landlord input a desired vacancy rate or time on Market, and service suggests the right price.

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#29

Post by rcpt »

tyre wrote: post #24
Espressosaurus wrote: post #21

Earlier quoted context omitted.

If rent no longer rises then the profit doesn't rise commensurately with demand, so the money isn't there to build supply. Rent control crushes supply to the degree that the rent control caps rents below the actual market rate. If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline. Rent fixing is the other side where supp…

If rents can’t rise quickly, then the expected profit of a building goes down, which means prices for land go down, which means it is cheaper to build, which means it balances out. If the balance is far enough off that everything turns into commercial real estate, that can be solved, too.

> prices for land go down, which means it is cheaper to build

By this logic San Francisco should be one of the cheapest places in the world to build

Re: Algorithmic rent-pricing litigation expands under new state and local laws

#30

Post by rcpt »

lotsofpulp wrote: post #27
tyre wrote: post #25

Earlier quoted context omitted.

When people are trying to afford living, “price transparency” is not the most helpful thing a government can provide. I agree that Prop 13 is god awful.

These side effects of these dynamics are not going to be evident or resolved in the short term. It took decades for prop 13’s (and other effects) to compound and become visible, and it will take decades to undo. There is no shortcut though, the incentives have to be set right, and there has to be patience for the results to show. Unfortunately, long term benefit at the expense of the short term is a core weakness in…

I don't think that's true. Prop 13 for example is priced into the market. Buyers bid higher because their taxes are frozen. This doesn't take decades to correct.

Market reactions are instant. Once the policy is fixed we don't have to wait for a generation

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