DOJ sues realpage for algorithmic pricing scheme that harms renters • Hacker News Board

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#101

Post by kelnos » Fri, Aug 23, 2024, 5:50 PM UTC

legitster wrote: post #30

I am a small-time landlord. There's no "marginal cost" to determine how much to charge for rent. The only thing I use to determine the price is the current market rate. And all I have to do is open up Zillow or Craigslist and do a search on similar properties with similar characteristics. It only takes ~5 minutes of research to get a competitive market rate. While RealPage might command 80% of the market for this typ…

> While RealPage might command 80% of the market for this type of software, they only have 12,000 clients. There are over 5.2 million multi-family dwellings in the US.

Those statistics don't tell us enough to see if this is a problem, though. In the extreme case (obviously this is not true), everyone uses pricing software, so RealPage's 80% is 80% of all dwellings, and those 12,000 clients own 4.2M multi-family dwellings.

Also what matters is number of units, not number of multi-family dwellings. Owning a duplex does not give you the same clout over local rentals as, say, owning the only large (at say, 500 units) apartment complex does.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#102

Post by failuser » Fri, Aug 23, 2024, 5:51 PM UTC

from-nibly wrote: post #36

deepsun wrote: post #31

Earlier quoted context omitted.

> If there's no profit to be made in building housing, why would anyone want to build housing? To live in it.

You want to live in an apartment complex by yourself?

You’ll need a construction cooperative. IDK if those can compete with large construction companies due to the economy of scale. The construction cooperatives were a staple of late Soviet and post-Soviet Russia, but were essentially outlawed later to make way for large construction business and mortgages-backed construction.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#103

Post by Manuel_D » Fri, Aug 23, 2024, 5:51 PM UTC

biggoodwolf wrote: post #90

Manuel_D wrote: post #24

Earlier quoted context omitted.

Lots of people want to blame rising prices on price fixing, when there really is growing demand without commensurate increases of supply. They want a silver bullet to bring down prices, without tackling the underlying problems. > That being said, I price my rental properties against what similar square footage gets at nearby apartments... Sooo if they are going up my rent is going up as well, and I bet most landlords…

No, many of these building are way under 80% utilization.

Can you reference where that figure is from? Because what I can find, SF has a single-digit vacancy rate: https://nainorcal.com/san-francisco-market-report-march-2023...

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#104

Post by RhodesianHunter » Fri, Aug 23, 2024, 5:51 PM UTC

toomuchtodo wrote: post #75

Manuel_D wrote: post #62

Earlier quoted context omitted.

All I'm asking you to do is list the specific laws or regulation you're referring to here when you write about the need to "protect renters". I don't know if we agree or disagree, because you haven't actually stated what your beliefs are. I definitely support regulations around housing: housind needs to be safe (fire exits, sprinklers, etc.). Landlords can't engage in deceptive practices, like putting up ads for one…

Dynamic price control of rents to prevent them from accelerating beyond what wages can support (existing tenants win vs potential new market entrants, them the breaks when supply is catching up to demand or cannot meet demand), tenant rights with strong local regulatory oversight, government incentives to encourage a diverse ecosystem of suppliers bringing new supply onto the market based on forecasted market demand…

>Dynamic price control of rents

How many economics studies, from all schools of economic thought, across 100 years of research need to prove that price controls don't work before people start accepting that fact?

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#105

Post by Alupis » Fri, Aug 23, 2024, 5:54 PM UTC

kelnos wrote: post #72

Manuel_D wrote: post #25

Earlier quoted context omitted.

Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. If it's proven that landlords colluded to fix prices, that…

> This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. Not sure what "price controls" you're talking about, but the reason it's expensive to build in SF (which reduces the appeal for builders) is zoning, the byzantine planning process, the ability of local residents to effectively block or delay projects, and weaponized en…

[flagged]

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#106

Post by RhodesianHunter » Fri, Aug 23, 2024, 5:55 PM UTC

Carrok wrote: post #45

margalabargala wrote: post #41

Earlier quoted context omitted.

You appear to be making an incorrect assumption that there is some consistent amount of housing which will be built each year, and the question is only how to distribute it among different localities. That's not the case. If you add the same price controls everywhere, then the same near-zero housing gets built everywhere. Construction companies will shut down, they will not continue paying people to build housing at…

You appear to be making an incorrect assumption that price controls must be so onerous that they will result in zero new housing being built.

I'm not trying to be snarky, I'm genuinely curious. Have you ever read the economics literature on price controls?

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#107

Post by bdcravens » Fri, Aug 23, 2024, 5:55 PM UTC

Manuel_D wrote: post #25

Carrok wrote: post #23

Earlier quoted context omitted.

> industry The fact that providing people with housing is even seen as an "industry" is a big sign of what is wrong with the world right now. It is essential to living a decent life. It should not be a driver of lining the pockets of people who are already rich.

Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. If it's proven that landlords colluded to fix prices, that…

> Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return?

No, but this doesn't change the fact that housing is a basic good like gasoline and insurance. Controls in those industries don't prevent companies from investing. Profit regulation doesn't mean no profit.

> price controls on housing lead to few developers willing to build there

Because there are alternate places without those controls. If housing were treated like the essential good that it is, there wouldn't be any ROI havens, and developers would adapt (or die if they can't accept reducing the typical ROI, which averages around 15%)

> rising demand which has not been satisfied by new housing construction

There's plenty of demand, just not for the houses that are being built. (That's not to say there aren't specific cities where there is no supply). Based on most affordability standards, many can't afford the typical rent or mortgage. If those prices can't come down, or income can't go up, then new types of much cheaper housing must be built.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#108

Post by Manuel_D » Fri, Aug 23, 2024, 5:56 PM UTC

dwallin wrote: post #100

Manuel_D wrote: post #25

Earlier quoted context omitted.

Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. If it's proven that landlords colluded to fix prices, that…

This is not a binary situation. There are plenty of reasonable approaches that help limit abusive landlord behavior without damaging the prospect of profitable real estate development.

I wholeheartedly agree that landlords should not engage in abusive behavior: Landlords should not discriminate on the basis of protected class. They should keep units safe and up-to-code. They should not engage in deceptive practices like advertising one unit and selling a different one, or falsifying facts about the unit.

But where I'm not going to agree is the notion that setting rent above a certain threshold is "abusive landlord behavior". If a landlord is setting the rent too high, the consequence should be that the unit stays vacant. If someone is willing to pay that rent, then evidently the rent wasn't too high.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#109

Post by kelnos » Fri, Aug 23, 2024, 5:56 PM UTC

bbatsell wrote: post #59

legitster wrote: post #30

I am a small-time landlord. There's no "marginal cost" to determine how much to charge for rent. The only thing I use to determine the price is the current market rate. And all I have to do is open up Zillow or Craigslist and do a search on similar properties with similar characteristics. It only takes ~5 minutes of research to get a competitive market rate. While RealPage might command 80% of the market for this typ…

RealPage works by collating private competition data from all of their clients, running models to determine the highest possible vacancy rate for an area that will lead to the highest possible market rate, then telling their clients to set at that price and never offer discounts or reductions. In a fair market, landlords with vacancies would want to fill them — they have tons of fixed costs and they can't leave money…

> running models to determine the highest possible vacancy rate for an area that will lead to the highest possible market rate

In my view, holding units vacant intentionally in order to increase profit should be illegal. Vacancy taxes don't go far enough; landlords who do this should be forced to sell any units they've decided to keep vacant, or see their properties seized.

Optimizing profit around providing people shelter (or avoiding doing so) is evil.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#110

Post by RhodesianHunter » Fri, Aug 23, 2024, 5:57 PM UTC

JackYoustra wrote: post #27

Carrok wrote: post #23

Earlier quoted context omitted.

> industry The fact that providing people with housing is even seen as an "industry" is a big sign of what is wrong with the world right now. It is essential to living a decent life. It should not be a driver of lining the pockets of people who are already rich.

I don't see why this is an important point: food is an industry and it's never been cheaper in human history than in developed capitalist countries with vibrant agribusiness.

True but, look up the price fixing that's been going on in big AG via AgriStats. Similar story as OP.