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DOJ sues realpage for algorithmic pricing scheme that harms renters

justice.gov

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

#141

Post by jmyeet »

Good.

There are two new aspects to RealPage in terms of being anticompetitive:

1. Using information from one customer to help set prices for other customers. Once you hit a certain market percentage, this effectively allows you to set prices; and

2. If everyone uses the same software that spits out the same results then this is effectively collusion even if it's not actual collusion, as in the trope of dark, shadowy figures meeting in a cigar-filled room.

Every aspect of our life is getting financialized as companies seek to extract every dollar from us. You see it with PE buying up vet clinics en masse for example. If you've wondered why your vet bills have gotten so expensive, that's probably why.

Anyway, using rent to squeeze every dollar from people in a way that raises everybody's rents with the blessing of the state (which has been the case until now) is state violence. It is using the necessity of shelter to cerce money from you.

People in general don't see this sort of thing as violence but it is. Just like polie crackdowns on protests are state violence.

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

#142

Post by bluGill »

tyingq wrote: post #6
currymj wrote: post #4

Algorithmic pricing that learns to tacitly collude is a hot area of study in computer science and economics. For example, if you train simple online learning algorithms to adjust prices, sometimes they can learn to keep prices high or to take turns winning customers, rather than just competing. People have found some empirical evidence of this on platforms like Amazon where a lot of small sellers use pricing bots. Ho…

Interesting as airlines have been doing this for a really long time.

Airlines do this internally all the time. However they do not share this information with each other.

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

#143

Post by Alupis »

EVa5I7bHFq9mnYK wrote: post #138
Alupis wrote: post #105

Earlier quoted context omitted.

[flagged]

True, just as people from Mexico don't have a right to live in the rich and nice USA, people from the sticks don't have a right to live in the rich and nice SF.

> A right is a power or privilege held by the general public, usually as the result of a constitution, statute, regulation, or judicial precedent[1]

Nobody has a "right" to live in SF. If you can afford SF, then nothing is stopping you.

You do have a right to live, but you do not have a right to live in a particular area.

[1] https://www.law.cornell.edu/wex/right#:~:text=A%20right%20is....

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

#144

Post by bluGill »

WarOnPrivacy wrote: post #133
RhodesianHunter wrote: post #118

Earlier quoted context omitted.

Housing supply is inelastic due to the time it takes to permit and built. Housing demand is more elastic than you suspect. People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely.

> People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely. This doesn't describe the major renter class who has few workable options to choose from. They take whatever they can get. Once they manage a place to live, they're likely trapped there because they don't have a wad of cash on hand (required to move). That's avera…

People also start to take on roommates or become roommates. People in general want a place of their own. However as rent goes up they will start to be willing to rent the upper bunk in a bedroom, and people who do have a place to live start to become willing to rent out part of their bedroom just to afford the rent. For most this is the last option they will take (homeless might be better if they can find a place to sleep the night outside)

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

#145

Post by legitster »

kerkeslager wrote: post #139
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. It's only a monopoly in that they offer a very niche product. So I doubt the implication the justice department is making here - that RealPage is having a significant impact on market price through widespread collusion. Well, given your only justificat…

Competition clearly isn't working for housing. Because it's not a competitive market. I am just skeptical to the extent it is due to pricing cartels.

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

#146

Post by everforward »

bluGill wrote: post #136
everforward wrote: post #122

Earlier quoted context omitted.

I think you’re presuming elastic supply, where you can make up the lost profit from undercutting by selling more units. Real estate supply isn’t very elastic, and demand already outpaces supply. Your units will likely get rented, as long as you aren’t in the top 0.1% of prices. Therefore your incentive is to maximize profit per unit since you can’t move more units. Your incentive is to also join in on price fixing, b…

For the landlord units is elastic. If you have many units you can always not rent out a few, in fact you should always have a few units that you are remodeling and thus cannot rent out. In general as a large landlord should have around 10% of units not rented, if you have more than that rented you should raise your rates until people go elsewhere thus bringing you down to 10%, while if you have less than 10% lower yo…

Supply was probably a poor term because it’s overloaded; I probably should have said stock. They cannot easily scale their stock of housing, so they can’t make up for lower profit with volume the way a grocery store or something might.

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

#147

Post by kerkeslager »

game_the0ry wrote: post #10
ajhurliman wrote: post #5

This blows my mind that they're actually pursuing this, the two complaints are that they schemed to decrease competition among landlords and that they monopolized commercial revenue management software. Both are completely bogus. You could say the entire profession of appraising real estate prices "decreases competition" if the first complaint is valid. And they certainly haven't monopolized the software space, I'd n…

I wouldn't be happy either if I was a landlord. But the landlord-ing business is a tough business, and business is about to get tougher.

If you think being in the landlord is tough, try getting a job.

I mean seriously, being a landlord is just owning something. At best, you do the work of a handyman, and get paid orders of magnitude more for that work. And if you're the average landlord, a handyman does a lot more work and does a better job because they actually have to compete. Being a landlord isn't hard, it's absurdly easy compared to the income it yields.

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

#148

Post by legitster »

lukev wrote: post #96
legitster wrote: post #43

Earlier quoted context omitted.

[flagged]

Yes. Price fixing can happen in any market where participants on one side of the market collude to set prices. It is mostly illegal in the US: https://en.wikipedia.org/wiki/Price_fixing#United_States

But again, these quotes aren't specific admissions of price collusion as they are just "getting the best price".

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

#149

Post by bluGill »

djyaz1200 wrote: post #128

A key problem with rent pricing is that a form of price fixing is imposed by fair housing law in a way that educated folks know how to circumvent, but many do not. When a lease is advertised at X price, it is not legal to offer one monthly price to one tenant and a different one to another, so no negotiating can occur. This also allows smart landlords to price fix without software because all rates are known since th…

> This also allows smart landlords to price fix without software because all rates are known since the posted rate is the rate.

The rates change monthly though, and smart landlords were already changing their rent every month.

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

#150

Post by legitster »

bick_nyers wrote: post #18
bearjaws wrote: post #7

I am very curious how this will play out. On one hand, I have seen it first hand here in Orlando that EVERY apartment complex uses the same software, all of them. At the same time, rent has gone up 300% in 10 years, or around 10% per year. FTA it states that it was the fact that they all shared all their pricing and inventory data with RealPage, which then determined the price using algorithms and therefore rental pr…

Housing is pretty inelastic. I think people are just willing to suffer financially to avoid the fate of homelessness. Just because there aren't vacancies anywhere doesn't mean that the price is fully justified, because housing will take priority over groceries for a lot of people.

Housing can be very elastic. Humans can be very adaptive to compromises in living space requirements to fulfill the basic needs.

Part of the problem is that the lower end of potential inventory (pod apartments/SRO/etc) are essentially illegal in this country. So the barriers to entry make it seem much more inelastic.

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