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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

#21

Post by ejstronge »

tootie wrote: post #11
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…

Yeah, there's nothing inherently wrong with algorithmic pricing. Issues would start to occur if the pricing was actively manipulated and RealPage was used by so many landlords in some geographic areas that competition broke down. That may be hard to prove.

A relevant excerpt from the complaint:

> RealPage-defined submarkets identified in Appendix A are relevant markets in which the agreements between RealPage and AIRM and YieldStar users to align pricing has harmed, or is likely to harm, competition and thus renters. In each of these markets, the penetration rate for at least (i) AIRM and YieldStar, or (ii) AIRM, YieldStar, and OneSite ranges from at or around 29% to more than 60%.10

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

#22

Post by weknowbetter »

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…

I mean what can you do? The market is forcing you to raise rent. Your hands are tied.

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

#23

Post by Carrok »

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…

> 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.

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

#24

Post by Manuel_D »

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…

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 do this.

This is essentially what RealPage does. It just automates calculating "what similar square footage gets at nearby apartments". It probably does other stuff like puts a premium on corner units or those with south facing windows.

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

#25

Post by Manuel_D »

Carrok wrote: post #23
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…

> 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 should be addressed. But the reality is, prices are only going up in a select few metros. And it's because lots of people want to live in those areas, which leads to rising demand which has not been satisfied by new housing construction. People desperately want to believe that there's a silver bullet that will bring prices down without actually addressing the mismatch between supply and demand.

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

#26

Post by bequanna »

Carrok wrote: post #23
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…

> 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.

Well, housing needs to mostly be handled by the private sector if we want high quality.

Government housing should absolutely exist, but only as a safety net as their management is incredibly inefficient.

Private housing isn’t the issue here: collusion is. Collusion should generally not be tolerated in a well regulated capitalist system.

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

#27

Post by JackYoustra »

Carrok wrote: post #23
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…

> 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.

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

#28

Post by toomuchtodo »

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…

Profits are fine, excessive profits at the cost of people who need housing are not. There is no silver bullet, but increasing supply along with strong regulation to protect renters is welcome vs them being cattle to be squeezed by for profit entities. Human rights are a thing, there is no right to profit.

> The six largest publicly traded apartment companies in the U.S. — all of which are linked to an alleged rental price-fixing scandal — experienced profit increases during the first three months of the year, according to an analysis from left-leaning watchdog group Accountable US exclusively shared with The Hill.

> In the analysis, the companies earned a combined $300 million in profit during the first quarter of the year, in part, due to rent increases.

Lots of profit to squeeze out with regulation, based on the evidence. The Vienna model is a proven model if for profit enterprises walk away from housing.

https://thehill.com/business/housing/4718252-large-apartment...

https://accountable.us/report-top-corporate-landlords-see-pr...

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

#30

Post by legitster »

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 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.

Furthermore, housing is a market - nobody is "competing on merits". There's limited inventory, and it goes first-come, first-serve. Realpage advertising that it gets the best dollar for its clients isn't that much different than your Schwab account letting you know you shouldn't sell your MSFT share for $50. I suspect the DOJ may have trouble actually proving that landlords held to the price recommendations to their own detriment to keep them high.

While I appreciate the breaking up of a potential cartel here, and this is a software I would never use, I would hold my breath if I was expecting a sudden change in the rental market because of this. Inventory is still fundamentally limited, and unless the DOJ bans all market research, the going rate is still the going rate.

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