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

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

#181

Post by trilobyte » Fri, Aug 23, 2024, 7:07 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…

So you would be ok with contractors who are building the houses (often as subcontractors) coordinating their prices for the work to maximize the cost to the developer?

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

#182

Post by pessimizer » Fri, Aug 23, 2024, 7:07 PM UTC

bluGill wrote: post #157

legitster wrote: post #111

Earlier quoted context omitted.

Again, I have experience in this market so I have first hand experience. I understand the cartel allegations here, but I think people are vastly underselling the competitive forces at play. If you are not filling your unit immediately, you are losing thousands of dollars a month. Cartels break down because of the incentive to undercut (prisoner's dilemma). But in this case, it would be very, very profitable to underc…

> If you are not filling your unit immediately, you are losing thousands of dollars a month. This is false. If you have 100 units with monthly rents at: 100x$900 = $90000, 90x$1000 = $90000. 85x$1100= $93500. Of course we have no idea how many people will decide to not rent from you at different rates, but it should be obvious that the numbers can work out to it being better to not rent a few units if the price goes…

> 85x$1100= $93500

And don't forget that you get to write off 15 empty units at the presumption of a $1100/mo rate. Or Airbnb them.

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

#183

Post by diebeforei485 » Fri, Aug 23, 2024, 7:07 PM UTC

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…

90% is actually quite healthy. If all housing was always full, there is no slack in the system. We should always have some overcapacity in the housing market, just like we do for hospital beds, food, water, etc. If you're always buying the last loaf of bread at the grocery store, that means others don't get bread when they want to buy it.

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

#184

Post by bluGill » Fri, Aug 23, 2024, 7:07 PM UTC

consteval wrote: post #156

game_the0ry wrote: post #10

Earlier quoted context omitted.

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.

I think being a landlord is pretty much the easiest business ever. As compared to real businesses, who really produce products and really participate in competitive markets.

Landlord is about luck of the tenants. A bad tenant will destroy your property costing you a lot of money. A bad tenant will not pay thus forcing you to have your property earning nothing for months until you can legally evict them. If you don't have enough tenants you lose money because you still have to pay your costs (the bank for your loan, maintenance...).

You can make a lot of money but it isn't easy money. (particularly in the early years, once you have the property paid for it is much easier)

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

#185

Post by [deleted] » Fri, Aug 23, 2024, 7:09 PM UTC

legitster wrote: post #111

bbatsell wrote: post #59

Earlier quoted context omitted.

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…

Again, I have experience in this market so I have first hand experience. I understand the cartel allegations here, but I think people are vastly underselling the competitive forces at play. If you are not filling your unit immediately, you are losing thousands of dollars a month. Cartels break down because of the incentive to undercut (prisoner's dilemma). But in this case, it would be very, very profitable to underc…

[deleted]

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

#186

Post by margalabargala » Fri, Aug 23, 2024, 7:12 PM UTC

Carrok wrote: post #172

margalabargala wrote: post #163

Earlier quoted context omitted.

You appear to be making an incorrect assumption that I said "zero new housing". I did not. I said near-zero. In your comment you explicitly specified that the whole country should adopt the same price controls as SF. SF's price controls are sufficiently onerous that nearly no new housing is built there.

> In your comment you explicitly specified that the whole country should adopt the same price controls as SF. I absolutely did not say this. I said "Set the same price controls across the entire nation", which means one set of consistent price controls for the country, not the existing set of price controls that SF currently has. Perhaps I should have worded it as "Set a consistent set of price controls across the en…

That's fair. The wording of your comment (heavily, honestly) implies setting SF's policies nationwide, but rereading I can see how it can be read the other way.

You're correct, "Set a consistent set of price controls across the entire nation" is a much better wording.

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

#187

Post by Animats » Fri, Aug 23, 2024, 7:14 PM UTC

The Justice Department is being soft on corporate crime here. This is a willful Sherman Act violation. The Sherman Act has criminal penalties, but Justice is only filing a civil case. All that the complaint asks for is an injunction and costs. There's no disgorgement. No breakup of large landlords. No shutdown of RealPage.

This is worth publicizing during election season. Rents are going up due to collusion.

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

#188

Post by trilobyte » Fri, Aug 23, 2024, 7:14 PM UTC

lukev wrote: post #16

Some quotes from the filing: > Discussing a different RealPage product, another landlord said: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing . . . .” > In fact, as RealPage’s Vice President of Revenue Management Advisory Services described, “there is greater good in everybody succeeding versus essentially trying…

My concern with this is that it fundamentally undermines competition, which is a promise of the markets. Being more efficient means delivering products more cheaply than your competitors, which is good for the market. This sort of collusion completely undermines that and holds back innovation in the market.

How would real estate developers feel if construction companies / subcontractors had a similar product for pricing their labor? Or how would any company feel if employees worked together to set the price of their labor? That sounds kind of familiar, and doesn't sound like something most companies would be happy about.

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

#189

Post by oooyay » Fri, Aug 23, 2024, 7:15 PM UTC

andrew_eu wrote: post #176

bogwog wrote: post #152

Earlier quoted context omitted.

I think you're over analyzing and confusing things. Price fixing is when competitors work together to raise prices above what they would normally be in a competitive market. Using your gas station example, a gas station isn't going to look at a competitor selling gas at $4.15 and decide to raise their price to $4.45. They would lower their price to match the competition, otherwise they'd lose sales and make less mone…

The analogy also works in the opposite direction. If a gas station is selling at $4.10 a gallon and another down the street is selling at $4.15, the first gas station could happily up their price to $4.14. 1% more revenue and they're still the cheapest on the block.

Competitive markets keep things within a tolerance, imo. If the average is $4.10 then you can expect the price to vary up and down by some amount depending on location and other things provided.

What RealPage does is distinct because it assures prices are always above and by orders of magnitude what they should be. It also achieves that through private communication which I think is generally accepted as a problem.

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

#190

Post by pessimizer » Fri, Aug 23, 2024, 7:16 PM UTC

kerkeslager wrote: post #147

game_the0ry wrote: post #10

Earlier quoted context omitted.

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…

If you're the average landlord, you hire people to maintain the building and deal with the tenants. Rich people constantly try to convince everyone that owning things is a job. If buying a business forces you to work operating it, it's because you couldn't afford the business outright, so instead you're paying it off with sweat equity.

Certainly nothing wrong with buying a job, it's positively Jeffersonian, but the reason you're working there is because you couldn't afford anyone else.

Being a landlord is just feudalism. Most of the terminology is still the same.