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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

#41

Post by margalabargala »

Carrok wrote: post #33
Manuel_D wrote: post #25

Earlier quoted context omitted.

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…

If price controls on housing exist in SF but not elsewhere, and this causes developers to not build there, then the issue is not that price controls exist in SF. The issue is that price controls do not exist elsewhere. Set the same price controls across the entire nation, suddenly there is no disincentive to not build in any one area.

You appear to be making an incorrect assumption that there is some consistent amount of housing which will be built each year, and the question is only how to distribute it among different localities.

That's not the case. If you add the same price controls everywhere, then the same near-zero housing gets built everywhere.

Construction companies will shut down, they will not continue paying people to build housing at a loss.

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

#42

Post by itake »

toomuchtodo wrote: post #35
itake wrote: post #34

Earlier quoted context omitted.

strong regulation increases costs (see all the permits and surveys required in SF). What are "excessive profits"? 10%? 15%? 25%? > experienced profit increases during the first three months of the year Does this even mean anything? This could mean their vacancy rate decreased and thus their business is more profitable. I don't see the issue with companies reducing vacancies and providing more housing to more people.

I cannot say, but experts can, and suggest to legislators and regulators implementation details. To operate a business in a jurisdiction is a privilege, not an entitlement.

I'd love to see the data on this. Usually when you increase construction costs, via additional regulation, you're going to increase the price of rent/sale.

What expert thinks increasing costs will lower prices?

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

#43

Post by legitster »

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…

[flagged]

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

#44

Post by legitster »

Sohcahtoa82 wrote: post #40
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. That reveals a startling statistic that 80% of the market is controlled by only 12,000 users. That's 433 units per user on average.

I think the better implication is that the vast majority of apartment owners don't bother paying for pricing software.

It's worth pointing out that third-party tools like 6Sense assess RealPage's customer base as much, much lower (around 6000 paying customers).

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

#45

Post by Carrok »

margalabargala wrote: post #41
Carrok wrote: post #33

Earlier quoted context omitted.

If price controls on housing exist in SF but not elsewhere, and this causes developers to not build there, then the issue is not that price controls exist in SF. The issue is that price controls do not exist elsewhere. Set the same price controls across the entire nation, suddenly there is no disincentive to not build in any one area.

You appear to be making an incorrect assumption that there is some consistent amount of housing which will be built each year, and the question is only how to distribute it among different localities. That's not the case. If you add the same price controls everywhere, then the same near-zero housing gets built everywhere. Construction companies will shut down, they will not continue paying people to build housing at…

You appear to be making an incorrect assumption that price controls must be so onerous that they will result in zero new housing being built.

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

#46

Post by toomuchtodo »

itake wrote: post #42
toomuchtodo wrote: post #35

Earlier quoted context omitted.

I cannot say, but experts can, and suggest to legislators and regulators implementation details. To operate a business in a jurisdiction is a privilege, not an entitlement.

I'd love to see the data on this. Usually when you increase construction costs, via additional regulation, you're going to increase the price of rent/sale. What expert thinks increasing costs will lower prices?

It's the other way around. Regulation around pricing forces housing providers to provide housing within a constrained cost model (land + materials + labor + cost of capital + permitting/AHJ requirements [regulation]). If they cannot meet the market (or choose not to, for whatever reason), public housing is an option, with muni bonds issued to finance construction. This removes the profit component, which a for profit enterprise needs, but public housing does not.

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

#47

Post by Manuel_D »

toomuchtodo wrote: post #28
Manuel_D wrote: post #25

Earlier quoted context omitted.

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…

The phrase "protect renters" is often used as a dogwhistle for price controls. For example, rent control and affordable housing mandates that require a certain % of units to be rented at below market rates. Can you elaborate on what exactly you're referring to here?

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

#48

Post by Carrok »

legitster wrote: post #39
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.

Modern housing is a direct development of the industrial revolution. In that sense it is an industry. You could provide housing like undeveloped nations do, where large families live in cramped hovels without electricity or running water. In the sense that someone should want an apartment with 2 bathrooms, a fireplace, and a pool - it's easier to treat housing overall as a consumer good.

This is quite the straw man you've constructed.

You seem to be suggesting that either housing must be exploitatively expensive, or people must live in squalor.

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

#49

Post by Manuel_D »

BobbyJo wrote: post #37
Manuel_D wrote: post #25

Earlier quoted context omitted.

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…

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.

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

#50

Post by sangnoir »

legitster wrote: post #39
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.

Modern housing is a direct development of the industrial revolution. In that sense it is an industry. You could provide housing like undeveloped nations do, where large families live in cramped hovels without electricity or running water. In the sense that someone should want an apartment with 2 bathrooms, a fireplace, and a pool - it's easier to treat housing overall as a consumer good.

...vs "providing" housing like developed nations in cramped shelters, in cars and on the street? FYI: multigenerational households are a cultural artifact, not an economic one. As one might assume, hovels without water or electricity don't break the bank, they aren't "provided" by anyone either. Yours is a false dichotomy, and is easily disproved by examples in other developed countries where shelter is considered a right.
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