3 ms·

If they are really facilitating collusion, then they would be selling a broken product. For example, for simplicity's sake, let's say that a city has a lot of l

by Aunche 4y ago

If they are really facilitating collusion, then they would be selling a broken product. For example, for simplicity's sake, let's say that a city has a lot of landlords, but all their units are identical and they all follow the RealPage algorithm for price suggestions. Realpage suggests that they charge an exorbitant $10000 per unit, which leads to only 50% of all units being occupied, so your expected value of $5000 per unit. However, if you're a landlord, you'd be better off renting your units at $9000, leading to 90% occupancy. Your expected profit per unit is $8100, so you're actually much better off without the algorithm.

loeg 4y ago
Your arbitrary figure of $9,000 -> $10,000 causing a 40% drop in occupancy is wholly invented. You could instead imagine a (still completely fictitious) figure that makes your argument look bad -- e.g., that the raise in rates causes a 0% drop in occupancy. Then the landlords/algorithm win by raising prices. One reason occupancy rates might remain relatively stable even in the face of rising prices is if consumers have relatively few better options, because e.g. all of your competitors collude to also raise their rates similarly.
- Aunche 4y ago
  > that the raise in rates causes a 0% drop in occupancy. Housing demand isn't really that inelastic. People will move to less crowded cities if they become too expensive. Americans tend to have much more living space per capita than most of the world, so there is a lot of room to move in with roommates or family. > all of your competitors collude to also raise their rates similarly. Realpage doesn't control the prices for the majority of housing in the US, the majority of rental units in the US, or even the majority of multifamily rental units in the US. If they tried to facilitate collusion, their customers would simply lose money.
  - ryan_lane 4y ago
    > People will move to less crowded cities if they become too expensive. The vast majority of people die within 10 miles of where they were born. People want to live near their families, and for the most part do not want to move to another city, and won't even if their rent is difficult to afford. > Realpage doesn't control the prices for the majority of housing in the US, the majority of rental units in the US, or even the majority of multifamily rental units in the US. They don't need to. They just need to control the prices for particular cities, because market prices are heavily tied to regions and not to the entire US. Detroit's housing market crashing didn't affect SF's rent.
ryan_lane 4y ago
There was another recent article related to this product, that showed large-scale landlord (4,000+ units) using this product to run experiments around their vacancy rate vs their revenue, to figure out how much they could raise rates by participating in the collusion. They started at 5% and were testing 15% vacancies. That's a considerable number of units to remove from the market, and basically an unheard of vacancy number to target, but they were showing higher revenue with this model. It's pretty obvious that this is a net negative on society.

by Aunche 4y ago

loeg 4y ago

Your arbitrary figure of $9,000 -> $10,000 causing a 40% drop in occupancy is wholly invented. You could instead imagine a (still completely fictitious) figure that makes your argument look bad -- e.g., that the raise in rates causes a 0% drop in occupancy. Then the landlords/algorithm win by raising prices. One reason occupancy rates might remain relatively stable even in the face of rising prices is if consumers have relatively few better options, because e.g. all of your competitors collude to also raise their rates similarly.

Aunche 4y ago
> that the raise in rates causes a 0% drop in occupancy. Housing demand isn't really that inelastic. People will move to less crowded cities if they become too expensive. Americans tend to have much more living space per capita than most of the world, so there is a lot of room to move in with roommates or family. > all of your competitors collude to also raise their rates similarly. Realpage doesn't control the prices for the majority of housing in the US, the majority of rental units in the US, or even the majority of multifamily rental units in the US. If they tried to facilitate collusion, their customers would simply lose money.
- ryan_lane 4y ago
  > People will move to less crowded cities if they become too expensive. The vast majority of people die within 10 miles of where they were born. People want to live near their families, and for the most part do not want to move to another city, and won't even if their rent is difficult to afford. > Realpage doesn't control the prices for the majority of housing in the US, the majority of rental units in the US, or even the majority of multifamily rental units in the US. They don't need to. They just need to control the prices for particular cities, because market prices are heavily tied to regions and not to the entire US. Detroit's housing market crashing didn't affect SF's rent.

ryan_lane 4y ago

There was another recent article related to this product, that showed large-scale landlord (4,000+ units) using this product to run experiments around their vacancy rate vs their revenue, to figure out how much they could raise rates by participating in the collusion. They started at 5% and were testing 15% vacancies. That's a considerable number of units to remove from the market, and basically an unheard of vacancy number to target, but they were showing higher revenue with this model. It's pretty obvious that this is a net negative on society.