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DOJ sues realpage for algorithmic pricing scheme that harms renters

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

#381

Post by gruez »

crazygringo wrote: post #354
gruez wrote: post #332

Earlier quoted context omitted.

>Today, it looks like landlords using mathematical algorithms to align their rents." It's unclear how that can ever be outlawed though. Given the classic supply/demand curve, everyone can theoretically independently derive the optimal price. Doing so would arguably be basic business acumen, and I'm not sure how the government can ban that without banning any sort of pricing research, or preventing businesses from set…

> Realpage goes beyond this by pressuring landlords to accept their recommended price, and that's probably what got them in hot water, but they could probably have gotten away with it if they didn't do that. Yes, but it seems like that would miss the point of Realpage entirely. Which is that if all landlords pay for it and are pressured to follow its recommendations they all make a lot more money. Using algorithms to…

>Yes, but it seems like that would miss the point of Realpage entirely. Which is that if all landlords pay for it and are pressured to follow its recommendations they all make a lot more money.

This would entirely hinge on what you think "the point of Realpage" was. Some argue it's collusion as a service, but it's also plausible that they're offering pricing research.

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

#382

Post by gruez »

samstave wrote: post #362
oconnore wrote: post #258

I am excited and optimistic that we appear to be applying economic principles to housing! Now that we're getting rid of centralized price controls / collusion, next can we do supply/demand?

>> Now that we're getting rid of centralized price controls / collusion > give me a dossier on BlackRock's holdings in real estate, go into detail on their holdings in residential, get as much real financial from their filings and reports. Give me a markdown table and an instaml/instaql schema for the data model * Blackrock would like a word https://i.imgur.com/PLwQ6sa.png https://i.imgur.com/1oAdbdC.png https://i.im…

>43,000+ units

That... seems like a drop in the bucket in terms of housing supply?

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

#383

Post by gs17 »

JumpCrisscross wrote: post #368
BeetleB wrote: post #342

Earlier quoted context omitted.

I follow the RE space, and have done some RE investments (albeit mild ones - I don't own homes to rent or anything like that). > punishing vacancies with taxation Outside of tourist spots, this will hurt more than it will help. Most RE investors lose money on vacancies (it's literally a line item in their expenses) and work hard not to have them. They definitely do not make more money by artificially limiting supply…

> Most RE investors lose money on vacancies (it's literally a line item in their expenses) and work hard not to have them Plenty of landlords would rather a unit in a building go empty for longer than compromise on rent in a way that weakens their negotiating position with the other units. (Also, with lenders.) The argument for taxing vacancies is city taxes are often set on the assumption of occupancy. A vacant unit…

>Plenty of landlords would rather a unit in a building go empty for a little longer than compromise on rent

Yep, I watched my last apartment (which I left partially because the rent went up to an unreasonable price) sit vacant for several months and laughed at how he could have made much more money if he compromised slightly on rent (which he seems to eventually given in to, so his greed only served to lose him money and not get the price he wanted).

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

#384

Post by llamaimperative »

gruez wrote: post #379
llamaimperative wrote: post #338

Earlier quoted context omitted.

It seems like you're saying "I don't know how they'd do a thing they're not trying to do." I wouldn't read too much into the slight vagueness around the distinction between just setting prices with the information available versus what Realpage was actually doing (as you describe) – I'm sure the case itself will draw such a distinction pretty well.

>It seems like you're saying "I don't know how they'd do a thing they're not trying to do." because the commenter I was replying to was characterizing what realpage was doing as "using mathematical algorithms to align their rents", which isn't illegal in and of itself. I specifically acknowledged in my previous comment that realpage was doing more.

That wasn't the commentator here, that was a quote from the opening (verbal) remarks. I.e. commentator + DOJ + you + I all know the distinction being drawn by the case, the AG just didn't dive into it in the first 3 sentences of his opening remarks on the case.

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

#385

Post by JumpCrisscross »

gruez wrote: post #376
JumpCrisscross wrote: post #345

Earlier quoted context omitted.

> unclear how that can ever be outlawed though There are certain categories of information that you are legally prohibited from sharing with your competitors. How you will set prices in the future is one of them [1]. Whether competitors agree on a specific price or a system of pricing ( e.g. X per square foot, or raise rent 1% every year except prime numbers when rent goes up 10%, or raise rent by the last number of…

>There are certain categories of information that you are legally prohibited from sharing with your competitors. How you will set prices in the future is one of them [1]. Right, but if you read my comment more carefully, I was specifically talking about the case where everyone derives the optimal price independently. Nowhere is sharing the price with your competitor mentioned.

> I was specifically talking about the case where everyone derives the optimal price independently

If you're using the same model you know your competitors use it isn't an independent derivation.

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

#386

Post by samstave »

gruez wrote: post #382
samstave wrote: post #362

Earlier quoted context omitted.

>> Now that we're getting rid of centralized price controls / collusion > give me a dossier on BlackRock's holdings in real estate, go into detail on their holdings in residential, get as much real financial from their filings and reports. Give me a markdown table and an instaml/instaql schema for the data model * Blackrock would like a word https://i.imgur.com/PLwQ6sa.png https://i.imgur.com/1oAdbdC.png https://i.im…

>43,000+ units That... seems like a drop in the bucket in terms of housing supply?

But thats a lot of power over rent cost 'normalization' given they can set the prices on a large # of units and pretty much all real estate is driven by "comparables in the area/market" thats an awful lot of "comparables"

Also these are basically fake numbers.

Unit could be an entire complex with hundreds of actual apartments.

---

EDIT:

They dont own any direct units, apparently, but they own a large percentage of the companies, developers, funds that do.

It a far more nuanced issue and hard to get a true understanding of, as money is the grout that fits everything together - its hard to see how it all works.

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

#387

Post by ebiester »

JumpCrisscross wrote: post #364
ebiester wrote: post #334

Earlier quoted context omitted.

When was this? Have you paid attention to the percentage of wages required for a unit nationally? In your area?

> Have you paid attention to the percentage of wages required for a unit nationally? In your area? Roommates.

I too had roommates coming up. People today have roommates coming up. That doesn't change the fact that even with roommates, the burden is disproportionately higher than it was for the last generation, particularly with housing.

Median household county in my area is about $55,000 a year. The median price of a house is $450,000. Assuming two people, the 50th percentile wage is equivalent of $14/hour. (This as an eyeball looks pretty close to a median wage.) Fair market rent for a 2 bedroom apartment (40th percentile) is 1500, or 32% of income.

If you let everyone get their own bedroom? For a below median two bedroom apartment, they will barely be able to afford the place.

A 4 bedroom place is $2500, so you're going to get about 100 dollar discount, but that all gets wiped out if one of your roommates leaves and you can't find a replacement. The more people sharing a space, the more risk there is.

It's tougher out there right now if you're not on an engineer's wage.

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

#388

Post by kstrauser »

mcmcmc wrote: post #328
kstrauser wrote: post #266

Earlier quoted context omitted.

Getting rid of the law of supply and demand is like getting rid of Boyle’s law. Legislate whatever you want but the behavior those laws model will still exist. I prefer to think of it this way. I like my markets free as in GPL, not free as in BSD. That is, I want the market itself to be free with limitations on the participants that keep them from taking it for themselves.

This is moronic. Economic theory is a self-reinforcing veneer of soft science studying observed human behavior with wild variance between different cultures, geographic markets, and individual people. The "laws of supply and demand" are not empirical laws of physics. They are general principles with well-known exceptions and flaws of their own. You should lay off the microdosing.

Supply & demand is such a basic emergent property of, well, anything involving life as we know it, that I have a hard time imagining opposition to it.

If a vendor anywhere in the world has more stock than their customers want, the price goes down. If more people want it than the vendor can provide, the price goes up. If there's more food than animals that want to eat it, animals eat their fill and the rest rots. If there are more animals than food, each spends increasing effort developing strategies to get more than their neighbors.

Now, if someone claims they can prove that demand increasing by X results in prices increasing by exactly Y, I'm with you. There are too many variables to make that predictable. But the basic idea behind it? That's pretty fundamental.

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

#389

Post by JumpCrisscross »

ebiester wrote: post #387
JumpCrisscross wrote: post #364

Earlier quoted context omitted.

> Have you paid attention to the percentage of wages required for a unit nationally? In your area? Roommates.

I too had roommates coming up. People today have roommates coming up. That doesn't change the fact that even with roommates, the burden is disproportionately higher than it was for the last generation, particularly with housing. Median household county in my area is about $55,000 a year. The median price of a house is $450,000. Assuming two people, the 50th percentile wage is equivalent of $14/hour. (This as an eyeba…

> doesn't change the fact that even with roommates, the burden is disproportionately higher than it was for the last generation, particularly with housing

Oh totally agree. Just pointing out that a straight comparison of wages to home prices doesn't dictate unaffordability.

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

#390

Post by kstrauser »

gs17 wrote: post #383
JumpCrisscross wrote: post #368

Earlier quoted context omitted.

> Most RE investors lose money on vacancies (it's literally a line item in their expenses) and work hard not to have them Plenty of landlords would rather a unit in a building go empty for longer than compromise on rent in a way that weakens their negotiating position with the other units. (Also, with lenders.) The argument for taxing vacancies is city taxes are often set on the assumption of occupancy. A vacant unit…

>Plenty of landlords would rather a unit in a building go empty for a little longer than compromise on rent Yep, I watched my last apartment (which I left partially because the rent went up to an unreasonable price) sit vacant for several months and laughed at how he could have made much more money if he compromised slightly on rent (which he seems to eventually given in to, so his greed only served to lose him money…

Our previous landlord evicted us to "rent it to her sister". We saw it listed for rent at a higher price soon after, and then it sat empty for 4 years. That did my heart good.
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