Hopefully the DoJ (metaphorically) puts the company’s head on a pike, as a warning to others. Businesses that use technology to make life worse for the public should tread cautiously.
DOJ sues realpage for algorithmic pricing scheme that harms renters
201–210 of 646 posts
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#202Earlier quoted context omitted.
I agree with most of what you said, and do think supply is ultimately the fix, however, we also have to acknowledge the extreme inelasticity of demand for housing, and the massive shoe leather cost, both of which leave consumers at a massive disadvantage in price discovery.
How are consumers at a disadvantage in price discovery? Hop on Zillow, craiglist, FB marketplace, etc. set your filters and sort by price.
Price discovery as in the market converging on a price, not as in an individual seeing how much something would cost at present.
https://en.m.wikipedia.org/wiki/Price_discovery
Since the good has very inelastic demand, suppliers have an easier time influencing the market. Small changes in supply should cause big changes in price, in both directions. However, prices go higher much faster during high demand than they go lower during low demand.
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#203Earlier 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…
> prevent them from accelerating beyond what wages can support
In practice what does this mean? If landlords raise rents beyond what people can pay... doesn't that mean they lose tenants? If they do not lose tenants, then by definition doesn't it mean they have not raised rents beyond what people can pay?
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#204Earlier 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?
It's called cooperative. If I'd like to live in apartment complex, I'd post an ad like "Buy an apartment in a future complex for a low price of X! Move in in only 2 years!". (Cost to build Y, number of apartments Z, X = Y/Z).
And it's not something new. When price is lower than market, people do buy it.
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#205Earlier quoted context omitted.
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. (pa…
Easy, you outsource your tenant management to a company that does that sort of thing. There's many highly reliable methods to get good tenants. Outsourcing to a company that specializes in that works because you're already making free money by being a landlord, so now you just make less free money.
None of them are taking on the risk of what the tenant isn't paying or you don't have one. Landlord also isn't free money. You have a lot of bills to pay.
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#206Earlier 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…
What about the counter incentive, that lowering rents lowers valuations, which affects creditworthiness and financing by lenders?
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#207Hopefully the DoJ (metaphorically) puts the company’s head on a pike, as a warning to others. Businesses that use technology to make life worse for the public should tread cautiously.
Not just the company. Also all of it customers who have followed their recommendations. All of them should be hit extremely hard.
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#208Earlier quoted context omitted.
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.
there is concern about tacit collusion if all the airlines start using the same pricing algorithms based on the same historical data. it doesn't even take a very smart pricing strategy for them to naturally learn to collude with each other.
However I would guess you will never have an email from an airline CEO that says "I really like this product...That's classic price fixing"
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#209Earlier quoted context omitted.
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.
They don't share how many seats are left publicly, but fare changes are shared real time in a platform that distributes them. And there's quite a lot of website scraping that goes on that mostly skirts around "how many seats are left".
Re: DOJ sues realpage for algorithmic pricing scheme that harms renters
#210The 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.
Criminal antitrust prosecutions seem to have stopped in 1977. Unclear why they never restarted.