DOJ sues realpage for algorithmic pricing scheme that harms renters • Hacker News Board

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

#91

Post by everforward » Fri, Aug 23, 2024, 5:42 PM UTC

legitster wrote: post #73

alpha_squared wrote: post #58

Earlier quoted context omitted.

I'm not sure I understand what politics have to do with this. Housing is essential. It's "politically charged" because of the lack of affordability. Part of that is due to lack of building and now, evidently, part of that is due to price-fixing.

But as evidence of price fixing, people claiming to get sellers the best possible price isn't a smoking gun in any other market - essential or not.

Most markets have many people making that claim, though. Those people have to compete against each other. Their pricing is also optional, where RealPage was basically forcing landlords to use their prices.

RealPage’s big issue is market penetration, though. They control pricing for enough of the housing stock to artificially manipulate the cost of housing.

It’s one thing to promise to get clients a sale price on the far end of the bell curve. It’s another thing entirely to move the entire bell curve.

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

#92

Post by schrectacular » Fri, Aug 23, 2024, 5:43 PM UTC

tossandthrow wrote: post #63

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.

The natural interest rate plus a bit. If you can earn 25% percent in profits in the current environment then it is a clear indication of an inefficient market - a market that needs to be regulated in order to create efficiency (like in this case as with many other cases: remove monopolistic behavior). While it is problematic if you can't derive profits from productive activities it is also problematic when entities d…

Targeting profit rarely helps. The big players can afford the financial engineers to make the profits negligible from an accounting perspective. Likely funneled into growth. The small players cannot, so you put them in a situation where selling to a big player is rational. And the oligopoly grows.

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

#93

Post by Manuel_D » Fri, Aug 23, 2024, 5:44 PM UTC

kelnos wrote: post #72

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…

> 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. Not sure what "price controls" you're talking about, but the reason it's expensive to build in SF (which reduces the appeal for builders) is zoning, the byzantine planning process, the ability of local residents to effectively block or delay projects, and weaponized en…

Policy restricting housing is indeed another factor impeding housing. The price controls I'm referring to are rent controls (which applies to ~70% of apartments in SF, and the threat of reintroducing rent controls looms) and affordable housing mandates. The affordable housing mandates require that a certain percentage of units are rented at set prices.

Again, if housing isn't an investment opportunity, then why would anyone build new housing? Sometimes people get together and build co-ops. But those are rare, and it's only available to people with a lot of capital on-hand. Plus, it runs the risk of the project going over-budget.

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

#94

Post by Manuel_D » Fri, Aug 23, 2024, 5:44 PM UTC

toomuchtodo wrote: post #75

Manuel_D wrote: post #62

Earlier 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…

Okay, so I was right: "protect renters" was indeed referring to price controls. Price controls coupled with what sounds like blatantly nativist policy:

> Dynamic price control of rents to prevent them from accelerating beyond what wages can support (existing tenants win vs potential new market entrants...

Can you elaborate on what you mean by "existing tenants win vs potential new market entrants"? Does this mean that landlords must rent at lower rates to someone who has lived in SF for some time, versus an immigrant that is willing to pay higher rents?

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

#95

Post by legitster » Fri, Aug 23, 2024, 5:45 PM UTC

lcnPylGDnU4H9OF wrote: post #61

legitster wrote: post #44

Earlier quoted context omitted.

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).

> I think the better implication is that the vast majority of apartment owners don't bother paying for pricing software. I don't think there's anything so far to indicate this or that; there's still a reasonable possibility that 80% of the market is controlled by large property management businesses.

This is easy to look up. There are approx 300,000 property managers in the US.

Assuming RealPage isn't lying about their number of active customers, they would only account for 16% of the industry. Obviously the numbers could be skewed wildly but it's still far from a monopoly.

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

#96

Post by lukev » Fri, Aug 23, 2024, 5:45 PM UTC

legitster wrote: post #43

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]

Yes. Price fixing can happen in any market where participants on one side of the market collude to set prices. It is mostly illegal in the US: https://en.wikipedia.org/wiki/Price_fixing#United_States

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

#97

Post by kerkeslager » Fri, Aug 23, 2024, 5:48 PM UTC

legitster wrote: post #73

alpha_squared wrote: post #58

Earlier quoted context omitted.

I'm not sure I understand what politics have to do with this. Housing is essential. It's "politically charged" because of the lack of affordability. Part of that is due to lack of building and now, evidently, part of that is due to price-fixing.

But as evidence of price fixing, people claiming to get sellers the best possible price isn't a smoking gun in any other market - essential or not.

This isn't relevant. I'm don't want smoking guns, I want an economy where harming people isn't profitable.

If I invest in a stock and the stock goes down, nobody looks at my intentions and decides whether I should make money off it. It's my responsibility to understand what I'm investing in.

If I invest in harming consumers, nobody should look at my intentions and decide whether I should make money off it. It's my responsibility to understand what I'm investing in.

Even if RealPage didn't know what they were doing was harming renters, they should have known that. Knowing how your actions affect people is a prerequisite to running a business in any market, but especially in a market where people's basic needs are at stake.

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

#98

Post by tossandthrow » Fri, Aug 23, 2024, 5:49 PM UTC

schrectacular wrote: post #92

tossandthrow wrote: post #63

Earlier quoted context omitted.

The natural interest rate plus a bit. If you can earn 25% percent in profits in the current environment then it is a clear indication of an inefficient market - a market that needs to be regulated in order to create efficiency (like in this case as with many other cases: remove monopolistic behavior). While it is problematic if you can't derive profits from productive activities it is also problematic when entities d…

Targeting profit rarely helps. The big players can afford the financial engineers to make the profits negligible from an accounting perspective. Likely funneled into growth. The small players cannot, so you put them in a situation where selling to a big player is rational. And the oligopoly grows.

The current economic environment definitely over indexes on very abstract metrics to steer, which is problematic.

I am also not proposing any formal system.

I am saying that it is quite easy to spot profits that are too high.

I am also saying that the governments role is to ensure efficient markets.

In this case it is suing RealPage.

It could also be making it easier to make housing in a specific area to counter under supply.

it is all regulation.

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

#99

Post by legitster » Fri, Aug 23, 2024, 5:49 PM UTC

seydor wrote: post #85

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…

> they only have 12,000 clients When you perform said Zillow or Craigslist search, do you settle for the higher end of the range of prices or the low end? Realpage only needs to manipulate a relatively small number of listings to have a huge impact in all rent prices.

The lower end! I usually undercut the market rate by ~$50.

My house rents for $2400 a month. If I leave it on the market for just a month I would lose more money than I would gain in 2 years at a higher rent! So the incentive is to get it rented out as quickly as possible and get it booked before the other guy.

So my incentive is to be just a bit lower than the other guy so mine goes first.

I will not deny that the market rate for housing is absurdly high, but it is still a market and incentives still matter.

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

#100

Post by dwallin » Fri, Aug 23, 2024, 5:50 PM UTC

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…

This is not a binary situation. There are plenty of reasonable approaches that help limit abusive landlord behavior without damaging the prospect of profitable real estate development.