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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

#581

Post by throwaway2037 »

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…

    > rent has gone up 300% in 10 years, or around 10% per year
From an outsider's view, this is a huge failure of local planners. That said, Orlando is a huge city with a population 2.5 million. I find it hard to believe that your statement applies to the entire city. Rents rising 10% per year (incredibly, really) is surely the sign of a hot/hip neighborhood where planning is way behind demand.

In most places (middle class and below), it is hard to raise rent faster than inflation because the renter's income is the primary limiting factor. If their income does not rise fast enough, they will move away. If the area is not "premium" (attracts upper middle class and above), eventually units will sit empty for a long time, and rents will fall.

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

#583

Post by vineyardmike »

SideQuark wrote: post #566
vineyardmike wrote: post #553

Earlier quoted context omitted.

> So companies in the future will not be able to subscribe to another companies algorithms? How is this a lot different? A lot different... keep reading more. > Tons of companies use credit bureaus to get the sameCredit data for pricing loans to people Except credit bureaus (1) are a regulated entity. You can't just use credit data freely, and you can't use any data to write loans. Loans can only be priced using appr…

Or I simply stop using their pricing, undercut my competitors, and gain tenants. Same as before. The US has around 15million landlords, 20+ million units. RealPage has ~6000 customers. It's pretty hard to set market prices with literally millions of competing landlords.

> Or I simply stop using their pricing, undercut my competitors, and gain tenants. Same as before.

Except the landlords signed a contract... they legally bound themselves to using their pricing.

Also the market keeps changing, so you'll need their pricing in the future (so you can't break your contracts), or you'll need to do your own independent market research without access to their data.

> It's pretty hard to set market prices with literally millions of competing landlords.

What's the most important rule in real-estate? Location. Location. Location.

"Market" prices, obviously, apply to a "market". There are not millions of landlords in any given real-estate market. You can't compare a studio in Manhattan to a townhome in SF and a ranch house in Houston. No one is actually shopping for a rental and considering all those options. The entire US is not one market.

The housing market in many parts of America do not operate like a traditional commodity market. Demand outpaces supply, and landlords can't just make more units to compete on margin - most landlords have very low vacancy rates already. There is no incentive to undercut your competition when you can fill units at higher prices with no drop to vacancy rates through cooperation.

If it was this easy, the company wouldn't exist and the suit wouldn't be moving through the courts.

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

#584

Post by BytesAndGears »

slt2021 wrote: post #571
wh0knows wrote: post #516

Earlier quoted context omitted.

This definitely requires some citations. There is no evidence that you are presenting that supports the 2-5% claim. I don’t think you are fully understanding the impact of price collusion or the suit presented here. The DOJ very clearly thinks this is anticompetitive.

False, you are wrong. Corporate landlords use RealPage in Austin, Minneapolis yet rents fall there because of supply of new housing. RealPage does impact rental prices, but only marginally, and the real impact to prices is from supply constraint + demand. If there is enough supply, any realpage algorithm wont matter much because of market forces. Market forces trump everything

> Market forces trump everything

Unless a certain company interferes with market forces — aka the whole purpose of this lawsuit.

If you need a place to live, what’re you going to do, be homeless? They have enough of the market in some cities to impact the market in a way that distorts the prices for everyone. Market forces cannot operate when companies act anticompetitively

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

#585

Post by slt2021 »

BytesAndGears wrote: post #584
slt2021 wrote: post #571

Earlier quoted context omitted.

False, you are wrong. Corporate landlords use RealPage in Austin, Minneapolis yet rents fall there because of supply of new housing. RealPage does impact rental prices, but only marginally, and the real impact to prices is from supply constraint + demand. If there is enough supply, any realpage algorithm wont matter much because of market forces. Market forces trump everything

> Market forces trump everything Unless a certain company interferes with market forces — aka the whole purpose of this lawsuit. If you need a place to live, what’re you going to do, be homeless? They have enough of the market in some cities to impact the market in a way that distorts the prices for everyone. Market forces cannot operate when companies act anticompetitively

I agree that realpage is the villain here, but let's not distract from the real problem.

even if realpage disappears overnight, rent prices wont fall because the new construction is outlawed by the NIMBYs.

fix new construction via zoning reform if you want to actually help people

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

#586

Post by ang_cire »

colonCapitalDee wrote: post #456
ang_cire wrote: post #421

Earlier quoted context omitted.

> If a company is able to price a product above their competitors and still succeed (e.g. by investing more in marketing), that's legal too. Yes, but it also runs counter to the idea that free markets tend to drive prices down through competition. In reality, 1 of 2 things happens: a) companies try to differentiate their products enough to not be direct competitors (e.g. exclusive content on streaming platforms, or p…

No, your time horizon is too short. Prices go up in the short term, which increases profits, which incentivizes competition, which brings prices down in the long term. A few years of increased prices is worth increased efficiency over decades. Prices are going in most industries, US markets are generally quite competitive.

Increasing profits just enables attacking competitors in other ways than via product competition. The narrative that profits get turned into RnD instead of executive bonuses and stock buybacks or acquisitions is a Econ 101 fantasy.

In the real world, Cisco, Meta, Amazon, and Microsoft don't make better products to win, they just buy Splunk, Insta, Whole Foods, and Bethesda.

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

#587

Post by refurb »

brandonfro wrote: post #536
andrewmutz wrote: post #531

Earlier quoted context omitted.

Honestly the strongest argument I've heard that these algorithms are anticompetitive is "The DoJ thinks they are". So maybe there's some non-public information of anticompetitive behavior. We don't know how many housing units use Realpage pricing algorithms in 2024, but in 2017 when Realpage bought the tech, it was being used in 1.5 million rentals ( https://www.realpage.com/news/realpage-to-acquire-lease-rent... ) a…

From the press release: "The complaint separately alleges that RealPage has unlawfully maintained its monopoly over commercial revenue management software for multi-family dwellings in the United States, in which RealPage commands approximately 80% market share."

That’s seems like an odd anti-competitive complaint considering the customer has the option to not use such software at all?

It’s like complaining about a monopoly on lawn mowing. Owners can always choose to mow their own lawns if they don’t like the cost of hiring it out.

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

#588

Post by michaelmrose »

slt2021 wrote: post #571
wh0knows wrote: post #516

Earlier quoted context omitted.

This definitely requires some citations. There is no evidence that you are presenting that supports the 2-5% claim. I don’t think you are fully understanding the impact of price collusion or the suit presented here. The DOJ very clearly thinks this is anticompetitive.

False, you are wrong. Corporate landlords use RealPage in Austin, Minneapolis yet rents fall there because of supply of new housing. RealPage does impact rental prices, but only marginally, and the real impact to prices is from supply constraint + demand. If there is enough supply, any realpage algorithm wont matter much because of market forces. Market forces trump everything

Supply will never exceed demand by very much because unlike a chair it's a very expensive good to sit on for long. Nobody profits by "overbuilding" so they won't do it nor defect on pricing given a collective target which benefits all owners.

People aren't pool balls bouncing around on a table they are fully capable of serving their interests.

Its weird to argue against the obvious conclusion that price fixing increases price

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

#589

Post by loa_in_ »

tayo42 wrote: post #580
II2II wrote: post #524

Earlier quoted context omitted.

Because it is a job that needs to be done and someone is willing to pay for it. For some people it may be the best job they can get. I understand why no one likes human resources. They are there to protect the interests of the business and it is in the best interest of the employee to interact with them as little as possible. On the other hand, they are a useful resource for managers. HR frees them up from many of th…

i mean if hr was just doing those things no one would complain. I get there's some nuance to the responsibilities of an HR department but interactions usually seem to be biased towards protect the company, not make peoples lives easier. So i think it takes a certain kind of person to actually be able to do that effectively.

The HR depts are usually pretty sizeable. It's a combined effort, for sure.

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

#590

Post by wh0knows »

slt2021 wrote: post #571
wh0knows wrote: post #516

Earlier quoted context omitted.

This definitely requires some citations. There is no evidence that you are presenting that supports the 2-5% claim. I don’t think you are fully understanding the impact of price collusion or the suit presented here. The DOJ very clearly thinks this is anticompetitive.

False, you are wrong. Corporate landlords use RealPage in Austin, Minneapolis yet rents fall there because of supply of new housing. RealPage does impact rental prices, but only marginally, and the real impact to prices is from supply constraint + demand. If there is enough supply, any realpage algorithm wont matter much because of market forces. Market forces trump everything

An anecdote does not prove that RealPage doesn’t have a greater impact in other markets… That’s just not how logic works. You also fail to consider that rents may have fallen further if RealPage was not in use.
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