21 ms·

I saw RealPage's crappy rent-jacking-up software so you don't have to

508 points by mkl95 4y ago

liminal 4y ago
I just rented an apartment in a building that uses RealPage. Somehow a 3 bedroom in the building was priced less than a 1 bedroom. When I asked why, the leasing agent said they had no idea and also no control over prices.
deleted 4y ago
[deleted]
bogwog 4y ago
I wonder if there are other industries engaging in this kind of price fixing scheme under the guise of "AI SaaS"?
- bongobingo1 4y ago
  Could you leverage it to make money?
  - xwdv 4y ago
    Of course. When other landlords are jacking up the rental prices in price fixing schemes you can undercut them with more reasonable profit margins and steal more business.
    - notahacker 4y ago
      This is a little difficult if you don't own rows of empty houses though...
      - xwdv 4y ago
        If it was easy everyone would do it.
  - anonymouskimmer 4y ago
    This is exactly what RealPage is doing. It's asking rental companies to increase prices. It's then turning around and marketing those percentage increases as a reason to use its software. So yeah, "you" can, if you're one of those AI SaaS companies.
- notahacker 4y ago
  I suspect there's plenty providing market value estimates based on what other customers are pricing at, but the computerised voice begging people not to price below what the algorithm says and requirements for property managers to seek "approval" to vary their own prices are unusually blatant...
- gobengo 4y ago
  look into the software your HR dept uses to know how much to pay you
  - Spivak 4y ago
    If you want a searchable term they’re called “compensation management.”
- cobertos 4y ago
  The parking lots owned by an entertainment company in the large city near where I live (Detroit) prices all their parking lots dynamically. There's a TV at each unmanned lot with a different price dependent on the distance from the event (different venues at different distances) and depending on event and time. Seems made to extract as much as absolutely possible.
- matsemann 4y ago
  In sports betting, you can buy a service that tells you what you should set your odds at [0], in order to match the market. Since hundreds of betting sites buy from the same company, they quickly converge on some set price. [0]: https://www.betradar.com/betting-services/live-odds-service/ https://www.betradar.com/betting-services/live-odds-service/
  - jker 4y ago
    And I thought I couldn’t hate sports betting any more than I already did. The ghost of Walter Annenberg is still haunting that slimy industry.
arciini 4y ago
Housing as a for-profit business kinda makes sense, but I think the main takeaway of the article is this: > The thing is, "the algorithm" should have very little to do with that sick feeling. The coldness of the interface and robotic voice certainly make for a stark contrast with the thing you are doing, but they aren't the cause. The moment you start thinking about someone's longtime home as something that can "align with strategy," and about pricing someone out of their longtime home as "an adjustment that would be more beneficial," you have morally lost. It doesn't really matter how you go about making that adjustment. The tool and the training for the tool definitely matters, but the truth is, making business decisions about housing will necessarily hurt people in ways that are disproportionate to the amount of additional income a landlord gets. This sucks for everyone, but especially for less mobile or financially-secure tenants. I don't think there's a great solution for the American rental system yet other than less profit-maximizing owners or schemes like HDB flats in Singapore.
- fsckboy 4y ago
  > but especially for less mobile or [less] financially-secure tenants the burden of taking care of people who are less able to take care of themselves is not a burden that the government should place on certain individual people or individual companies, so rest of us can go on about our days happy that we don't have to think about it any more. If you want us to redistribute money to people so they don't need to move, the bite should equally come out of your and my income and bank accounts, not just landlords'. If you think that the govt should buy all this property so it can do a great job of being a landlord and tenants will be happier that way, get those laws passed. Till then, the fallback is not to simply punish rental property owners. (disclosure, I own property but I don't rent it out because I don't want the hassle, the money is not worth it)
  - Avshalom 4y ago
    >punish rental property owners Y'all see this rhetorical jump right? arciini made no mention of any action against landlords but to get out ahead of any possibility even as small as social-pressure against raising rents fsckboy has both escalated the framing language to "punishing" them and also shifted the frame from the plight of renters to the plight of rentiers.
sublinear 4y ago
The line between "best practices" and "cartel" is very thin.
azinman2 4y ago
I worry about time passing for any existing stable industry where MBAs want to come in and “exploit inefficiencies.” It reminds me of Warren Buffet noticing how he can keep raising the price of See’s candies without losing customers. “Look at all that price elasticity l!” Meanwhile ordinary people become poorer. There are a lot of reasons for wealth inequality, but finding ways to extract more profits off the same product or industry erodes society over time. I don’t know what could practically be done about all of this, but left unchecked, this will continue well into the future.
- marcosdumay 4y ago
  > I don’t know what could practically be done about all of this Make your government ensure market competition, and stop it from harming said competition an declaring winners.
  - ethbr0 4y ago
    This. The problem is not that companies are able to increase prices and improve their margins. That's good! The problem is that our institutions (government, journalism, small business entrepreneurship) have reneged on their role of promoting competition, leading to a lack of fear of competitors in companies, leading to an increased ability by them to increase prices. There should be more self-reflection on why price increases are possible, and redress of those causes, versus attempting to treat the symptom. #1 place to start looking -- how to balance the ultra-high efficiency of consolidated firms with their ability to deploy overwhelming capital in novel industries to crush competition. Or in other words: "How do we make it so that starting up a Facebook or Google or Microsoft competitor today is a reasonable?" E.g. instead of putting price caps on necessary-but-low-volume medications, look into why it was able to collapse into a single-supplier market
    - zopa 4y ago
      > The problem is not that companies are able to increase prices and improve their margins. That's good! That's going a bit too far. Under perfect competition there aren't any profit margins: everything sells at marginal cost. Real-world markets won't be like this, but they can get reasonably close. If there are large and increasing profit margins, that's a sign something has gone wrong. Also, we need to be realistic about natural monopolies. Sometimes the competition we want isn't in the cards, and treating the symptoms really is the right answer. If that necessary-but-low-volume medication has sharply declining costs with increasing production, as many things do, there just aren't going to be enough suppliers to build a competitive market. Competition policy is great, but it can't do everything.
munificent 4y ago
> Specifically, every morning, RealPage provides participating Lessors with recommended price levels. ... If Lessors wish to diverge from the “approved pricing” they must submit reasoning for doing so and await approval. ... But RealPage emphasizes the need for discipline among participating Lessors and urges them that for its coordinated algorithmic pricing to be the most successful in increasing rents, participating Lessors must adopt RealPage’s pricing at least 80% of the time. It's hard to imagine a clearer, more blatant description of cartel price fixing. This is like calling your pyramid scheme "Pyramidal Inc.".
- peoplearepeople 4y ago
  > await approval Sure seems like RealPage is price fixing then
  - vel0city 4y ago
    The approval wouldn't be from RealPage, it would be from that employee's supervisor. Essentially, one can configure RealPage (and RealPage seems to make this suggestion) to use their auto-price tool by default and require management approvals if employees want to set the price to something else. If I'm buying a Playstation at Walmart, chances are the person at the checkout counter can't change the price directly and give me a discount. They probably can call over a manager who could approve a price change because they can see I'm a really cool person who should get $50 off this Playstation.
    - solarmist 4y ago
      No, the article is very clear. There is approvals team that that has to press the button in addition to management. To slow down/increase friction the process even more.
      - vel0city 4y ago
        > There is approvals team that that has to press the button in addition to management. I agree the article is very clear. The approvals team is the management of the property. From the article: > If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required. This snippet is in the "..." from the above comment. Funny they snipped out this extremely critical part of the quote to show who does the approval. Where does it say RealPage employees need to approve the price?
kilotaras 4y ago
What you see here is not price-fixing, but expedited price-discovery. What is problematic (to society generally and renters specifically) is the fact that this price-discovery is done in the market with artificially constrained supply. Prices raise because people are willing to pay that much for dwelling. People are willing to pay that much, because supply doesn't keep with demand. ## Why I don't consider this a case of price-fixing Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view. There's very strong incentive to defect from "optimal vacancy rate" and eat outsized profit compared to the rest of competition. Making building easier makes consolidation harder, as outsiders are now potential defectors as well. AFAIK we're not in monopoly situation (yet?) for rental properties.
- dangerlibrary 4y ago
  What you see here is literally the definition of cartel price fixing. OPEC engages in price fixing. It is unstable, as you say, but nobody would say "OPEC is a perfect example of the free market functioning exactly as it should, with no price fixing or market manipulation going on."
  - sib 4y ago
    OPEC technically engages in supply fixing - the market then sets the price driven by the intersection of the demand curve and the (fixed) supply. If OPEC reduced supply and users of oil reduced demand by more than that same percentage, prices would likely drop.
  - Aunche 4y ago
    The biggest beneficiary of cartels are competitors that are outside the cartel. For example, OPEC enabled fracking to be profitable. To hurt fracking, they loosened their price fixing. If RealPage were price fixing rather than simply facilitating price discovery, landlords would have no incentive pay for the service.
    - dangerlibrary 4y ago
      > The biggest beneficiary of cartels are competitors that are outside the cartel. This is just... obviously wrong. If this were true, nobody would ever join a cartel, since membership is voluntary. All antitrust legislation and enforcement would be rendered entirely moot, because nobody would ever collude to fix prices.
jconley 4y ago
Housing is not a right in the US. It's a for-profit endeavor. Unless that fundamental thing changes expect rents to go up as much as the market will bear and landlords to do everything to make as much profit as possible. Side note: I doubt this is actually "AI". Probably some heuristics.
- stewx 4y ago
  And this is totally fine as long as the supply side of the market is allowed to react and build more supply in response.
  - sixo 4y ago
    Though, even if the supply side was immediately opened up, some redistribution is justified to make up for the historical lack of capacity and the inevitable decade it would take to catch up with demand.
- MonkeyMalarky 4y ago
  Your mere existence without profiting others is practically criminal.
  - sixo 4y ago
    Well, no, not to defend it really, but the premise is that your use of the amenities of modern society, which people put a lot of effort into creating, is earned by providing profit to others, not merely an entitlement. This conflicts with our moral sense (in part because there's nowhere you can go to opt out) so we backstop it with entitlement programs. But the premise is a least in principle fairly sound; not as evil as what you articulated.
- smt88 4y ago
  > Housing is not a right in the US Price-fixing is not a right in the US. It's explicitly illegal. We as citizens should be strongly opposed to anything that makes housing more expensive because it contributes to homelessness, which is much more expensive than just forcing landlords to actually compete with each other (you know, like the free market is supposed to). The biggest threat to a competitive market isn't the government in the US. It's the accumulation of power by a small number of actors who control the majority of the supply side.
newaccount74 4y ago
Holy shit, how bad is that? People have been saying that market demand is the reason for rising rents, but in reality it's just landlords colluding to fix prices and leaving units empty to create artificial scarcity? This is worse than I thought.
- denimnerd42 4y ago
  They’ve been doing this manually with NYC storefronts forever. Now the automation exists (and has for at least 10 years) to do it globally. Yikes. i say at least 10 years as that’s the last time I rented. My apartment definitely used this software then and realpage hq is just across the street.
  - jareklupinski 4y ago
    if you search nybits.com (i think the last nyc apartment aggregator that sorts by date), you can see a daily flood of realpage-adminstered buildings shifting their units' prices up or down a few dollars every day I don't think they do this on purpose; when I called one of the buildings I was interested in, their leasing agent was surprised I could even see the 'real price'...
- anonymouskimmer 4y ago
  It's both, not an either/or.
- rootusrootus 4y ago
  It's not just landlords, no. Some people want to force urbanization, so the government creates urban growth boundaries to limit sprawl. But then many of the people inside the boundary don't want high density housing near them, so they support zoning to keep it away. And mostly I don't think landlords are the ones leaving units empty -- it's investment groups that don't want to have tenants in the first place, they don't want to be landlords, they just want an asset that grows in value. There is a very legitimate supply problem, and blaming landlords won't solve it. They only have the leverage they do because the government gave it to them. We could make the gov't back off if we wanted to, but by and large we don't seem to want to.
matchbok 4y ago
This is the natural result of policies that make it difficult to build new housing. Landlords only have immense power in areas where demand outstrips supply.
- maxsilver 4y ago
  This is not true. Landlords have immense power everywhere, even in markets where supply far outstrips demand. (Much of the non-coastal US are places where supply far outstrips demand for many years, and landlords are still immensely powerful here) You still have to break up price fixing cartels like this. You can't just lean back and pretend "moar supply" will magically fix anything.
  - matchbok 4y ago
    As a landlord, I can tell you this is false. A good tenant for cheap rent is worth much more than a few extra bucks. Have you owned rental housing before? Didn't think so. The cute comments ("moar supply") signify your ignorance on the various aspect of the housing market at large. And that is an unproductive comment that demonstrates your overall lack of understanding of the issue at hand. This "cartel" is a symptom, not a cause. Nobody is price fixing sedans, are they? I wonder why. Oh, supply of hundreds of options and price points? Hmmmm....
solarmist 4y ago
A thought I had just now is that historically prices were static until an event happened to cause in increase, now prices are becoming dynamic and monotonically increasing unless an event happens. The price collusion is greed/growing pains for prices being dynamic by default. This is another social norm that is being discarded by modern society. In the past, you didn’t go to a store two days in a row and see different prices without a good reason.
- none_to_remain 4y ago
  Inflation is not a new phenomenon
  - solarmist 4y ago
    It’s not, but they way we dealt with it has changed.
- saulpw 4y ago
  I go to the grocery store multiple times a week and see different prices for things I buy. They are constantly changing prices, with sales and offers and 2-for-1. I know this is to confuse me into not knowing what the "real" price of a good is, so that when I run out of ketchup I'm somehow fine paying $8 for a bottle.
  - solarmist 4y ago
    Yup. That is another example of this exact same thing. Probably the more common one.
wpietri 4y ago
So what would the opposite of this look like? What software could we make for renters that would increase their market power?
- koromak 4y ago
  I'm not sure theres an angle of attack here. People need to live somewhere, they don't get to argue the terms.
  - wpietri 4y ago
    Leases can definitely be negotiable, even as an individual. I've done it! But I'm wondering what could be done if, like RealPage, we enable collaboration.
  - toast0 4y ago
    Most people have options... A single person can rent a whole house, a 2 bedroom apartment, a 1 bedroom, a studio, or just a room out of a larger unit (or part of a shared room). And choose from a range of locations.
    - maxbond 4y ago
      A wealthy single person can muse between renting an entire house or subletting a single room, sure. For most people these options are worlds apart, and they wouldn't entertain both of them at once.
- DoctorOW 4y ago
  Realpage isn't the only software in that space. A software which finds the lowest possible rents and keeps Realpage as a last resort would be useful. It'd be difficult to monetize.
- nvr219 4y ago
  Develop software to help manage a tenants' union and software to help them find lawyers to help with collective bargaining.
duped 4y ago
The software engineers who develop this should be ashamed of themselves. You're making the world worse.
- htag 4y ago
  I know plenty of software engineers that are also landlords. It seems like a clever sort of hack to earn a paycheck from a company that is increasing the value of your investments.
- zethus 4y ago
  Hey now, they're just trying to make enough money to pay their ever-increasing rent! /s
jeffbee 4y ago
You know, there just aren't that many vacancies. If you want to break this cartel you need inventory. I recently crawled all the listings in my county that are hosted by marketing company Engrain, and the problem is there just aren't that many. The only buildings with a lot of vacancies are new ones that are still leasing up. https://observablehq.com/@jwb/survey-of-east-bay-apartment-vacancies https://observablehq.com/@jwb/survey-of-east-bay-apartment-v...
tonymet 4y ago
Policymakers are not giving enough attention to the impact of phony pricing signals like this. See also Zillow Score / Redfin price. You can inflate prices if you have a broad effect . A good example is a study of payday loans that tend to move upward due to price signals set by local lawsn
more_corn 4y ago
Perhaps we should refer to it as “landlord price collusion software” Call a spade a spade.
neilv 4y ago
The style of this article isn't quite something that I'd want to forward to my state AG's office. It'd be easier to forward reporting by the WaPo or NYT that makes a credible case for price-fixing.
- rgovostes 4y ago
  That would be https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
matt3210 4y ago
#vanlife !!
makestuff 4y ago
I check my NYC apartment website at least 2-3x per week since my renewal is coming up soon. The variance between pricing is insane. There is a 2k delta between 1br apartments on the SAME FLOOR, and the cheaper one is the better layout. They change every week though by hundreds of dollars. It makes absolutely zero sense to me.
- hn_20591249 4y ago
  I got a rental raise for a 1 bedroom in Bushwick from $2700 to $3500. I told them this was unreasonable for the area, but they refused to budge on the price, offering a paltry $50 discount. That apartment eventually got re-rented for $2700 according to StreetEasy as they couldn't find tenants at the price point they (or the "algorithm") wanted.
  - HDThoreaun 4y ago
    Many people are willing to pay more to not move, especially if they're in a walk up. Forcing returning tenants to pay more seems like one of the first moves landlords would try.
EGreg 4y ago
It is part of a much larger trend with AI: https://news.ycombinator.com/item?id=34928179 https://news.ycombinator.com/item?id=34928179
pizzaknife 4y ago
real page isnt the only prop management software corp doing this, i know first hand(and quitting that job was a great feeling).
trollerator23 4y ago
This is a friggin' cartel and somebody should be doing jail time
shaaaaawn 4y ago
This post hits close to home and could not be more accurate satire of the pains of property management. I spent a number of years building a competitor to RealPage's Resident Portal, ActiveBuilding (shoutout https://henrihome.com https://henrihome.com). RealPage and Yardi dominate the industry with some of the worst software imaginable. The price fixing and competitiveness in the industry is a feature not a bug. ActiveBuilding basically built thefacebook.com for residents where the sticky feature was online rent payment. They of course got bought by RealPage which continued to operate it as is for a long time with few improvements, but landlords were tied to the ecosystem and didn't really care about the resident experience as long as they could pay rent online and submit maintenance requests. Also who the F decided that they don't need spaces in Product names over there?! ActiveBuilding RealPage. Rant over
Animats 4y ago
Sellers hate a free market where they have to compete on price. They don't want to live in fear of the other guy cutting their price and stealing their market share. You need a monopoly to win. That's the whole premise of Thiel's "Zero to One", and indeed, the VC community. YCombinator would never fund something that had to compete on price, unless there was some huge price advantage possible.
gaoshan 4y ago
When rent gets like this (very high and controlled by a cartel as appears to be the case here) then there needs to be a remedy and the free market isn't going to be it. If the subject were some luxury good that was being impacted it would be of much less concern but this is housing. It's a fundamental human necessity and it's being manipulated. The ideal here should be to cause the least harm. To everyone involved. Landlords should not be ruined but even more important should be the right of people to reasonable housing costs. Again, this is not a luxury... it's a basic human requirement and since it appears to be getting out of hand there needs to be a remedy. The only group powerful enough to provide that remedy, in our system, is the government.
- crooked-v 4y ago
  The remedy would be taking every city over a certain population, slam dunking local restrictive zoning and permitting straight into the trash, and replacing it with permissive "shall issue" zoning at the state or national level, in the style of Japan [1]. There's no great mystery here. There just aren't enough housing units in the places people actually want to live, and local cities are keeping it that way. [1]: http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
  - lotsoweiners 4y ago
    So should I just take my valuable but older real estate and have it leveled to rebuild similar amount of units but now luxury versions for much higher rent or sell to future land developers?
indymike 4y ago
This is just naked collusion as a service. The lawsuits will be spectacular.
rglover 4y ago
Just had a tangentially related conversation about a similar-ish process that restaurant managers/chains use to figure out viability of new locations. They just blindly use software to tell them if the community size/traffic flow will generate revenue relative to costs. Seeing this article, too, along with a dozen other personal anecdotes (and seeing the early stages of blind-trust in AI), I'm realizing we're moving toward a point where over-trust in "what the computer says" is going to have material effects on civilization. Ironically, the "Terminator Scenario," won't be what destroys us. Instead, it will be people's brains turning to mush due to over-reliance on AI/algos/etc. We'll simply hit a point where few if any people exist who understand the analog side of what the software is automating.
ROTMetro 4y ago
Just like last time RealPage came up, submit complaints to the FTC against that people! It only works if you actually use the system. The system isn't just magic. https://reportfraud.ftc.gov/ https://reportfraud.ftc.gov/
tristor 4y ago
Software like this is why I agreed to a rent of $X prior while applying for a lease, and after income verification was returned a rent of $X+30% on the final lease agreement, with an excuse that "it took us several business days to process and rents are recalculated daily based on current market conditions." Which, I knew, intuitively was utter bullshit and they just wanted to fuck me over some more than they already were because they found out I made decent money as a tech worker. Of course, I'm in a bad rental market, and this place was a better option than others, so we sucked it up and took it, and that's why I'm paying nearly $4k/mo in rent when it should be around $3k/mo in the current market (and since prices have fallen, probably closer to $2500/mo). It's super-scummy behavior and if it weren't "washed" through this software, would be blatantly illegal. Why do we allow these "loopholes" where a company exists to essentially help other companies directly break the law in spirit, but barely not in letter?

508 points by mkl95 4y ago

I just rented an apartment in a building that uses RealPage. Somehow a 3 bedroom in the building was priced less than a 1 bedroom. When I asked why, the leasing agent said they had no idea and also no control over prices.

deleted 4y ago

[deleted]

bogwog 4y ago

I wonder if there are other industries engaging in this kind of price fixing scheme under the guise of "AI SaaS"?

bongobingo1 4y ago
Could you leverage it to make money?
- xwdv 4y ago
  Of course. When other landlords are jacking up the rental prices in price fixing schemes you can undercut them with more reasonable profit margins and steal more business.
  - notahacker 4y ago
    This is a little difficult if you don't own rows of empty houses though...
    - xwdv 4y ago
      If it was easy everyone would do it.
- anonymouskimmer 4y ago
  This is exactly what RealPage is doing. It's asking rental companies to increase prices. It's then turning around and marketing those percentage increases as a reason to use its software. So yeah, "you" can, if you're one of those AI SaaS companies.
notahacker 4y ago
I suspect there's plenty providing market value estimates based on what other customers are pricing at, but the computerised voice begging people not to price below what the algorithm says and requirements for property managers to seek "approval" to vary their own prices are unusually blatant...
gobengo 4y ago
look into the software your HR dept uses to know how much to pay you
- Spivak 4y ago
  If you want a searchable term they’re called “compensation management.”
cobertos 4y ago
The parking lots owned by an entertainment company in the large city near where I live (Detroit) prices all their parking lots dynamically. There's a TV at each unmanned lot with a different price dependent on the distance from the event (different venues at different distances) and depending on event and time. Seems made to extract as much as absolutely possible.
matsemann 4y ago
In sports betting, you can buy a service that tells you what you should set your odds at [0], in order to match the market. Since hundreds of betting sites buy from the same company, they quickly converge on some set price. [0]: https://www.betradar.com/betting-services/live-odds-service/ https://www.betradar.com/betting-services/live-odds-service/
- jker 4y ago
  And I thought I couldn’t hate sports betting any more than I already did. The ghost of Walter Annenberg is still haunting that slimy industry.

arciini 4y ago

Housing as a for-profit business kinda makes sense, but I think the main takeaway of the article is this: > The thing is, "the algorithm" should have very little to do with that sick feeling. The coldness of the interface and robotic voice certainly make for a stark contrast with the thing you are doing, but they aren't the cause. The moment you start thinking about someone's longtime home as something that can "align with strategy," and about pricing someone out of their longtime home as "an adjustment that would be more beneficial," you have morally lost. It doesn't really matter how you go about making that adjustment. The tool and the training for the tool definitely matters, but the truth is, making business decisions about housing will necessarily hurt people in ways that are disproportionate to the amount of additional income a landlord gets. This sucks for everyone, but especially for less mobile or financially-secure tenants. I don't think there's a great solution for the American rental system yet other than less profit-maximizing owners or schemes like HDB flats in Singapore.

fsckboy 4y ago
> but especially for less mobile or [less] financially-secure tenants the burden of taking care of people who are less able to take care of themselves is not a burden that the government should place on certain individual people or individual companies, so rest of us can go on about our days happy that we don't have to think about it any more. If you want us to redistribute money to people so they don't need to move, the bite should equally come out of your and my income and bank accounts, not just landlords'. If you think that the govt should buy all this property so it can do a great job of being a landlord and tenants will be happier that way, get those laws passed. Till then, the fallback is not to simply punish rental property owners. (disclosure, I own property but I don't rent it out because I don't want the hassle, the money is not worth it)
- Avshalom 4y ago
  >punish rental property owners Y'all see this rhetorical jump right? arciini made no mention of any action against landlords but to get out ahead of any possibility even as small as social-pressure against raising rents fsckboy has both escalated the framing language to "punishing" them and also shifted the frame from the plight of renters to the plight of rentiers.

sublinear 4y ago

The line between "best practices" and "cartel" is very thin.

azinman2 4y ago

I worry about time passing for any existing stable industry where MBAs want to come in and “exploit inefficiencies.” It reminds me of Warren Buffet noticing how he can keep raising the price of See’s candies without losing customers. “Look at all that price elasticity l!” Meanwhile ordinary people become poorer. There are a lot of reasons for wealth inequality, but finding ways to extract more profits off the same product or industry erodes society over time. I don’t know what could practically be done about all of this, but left unchecked, this will continue well into the future.

marcosdumay 4y ago
> I don’t know what could practically be done about all of this Make your government ensure market competition, and stop it from harming said competition an declaring winners.
- ethbr0 4y ago
  This. The problem is not that companies are able to increase prices and improve their margins. That's good! The problem is that our institutions (government, journalism, small business entrepreneurship) have reneged on their role of promoting competition, leading to a lack of fear of competitors in companies, leading to an increased ability by them to increase prices. There should be more self-reflection on why price increases are possible, and redress of those causes, versus attempting to treat the symptom. #1 place to start looking -- how to balance the ultra-high efficiency of consolidated firms with their ability to deploy overwhelming capital in novel industries to crush competition. Or in other words: "How do we make it so that starting up a Facebook or Google or Microsoft competitor today is a reasonable?" E.g. instead of putting price caps on necessary-but-low-volume medications, look into why it was able to collapse into a single-supplier market
  - zopa 4y ago
    > The problem is not that companies are able to increase prices and improve their margins. That's good! That's going a bit too far. Under perfect competition there aren't any profit margins: everything sells at marginal cost. Real-world markets won't be like this, but they can get reasonably close. If there are large and increasing profit margins, that's a sign something has gone wrong. Also, we need to be realistic about natural monopolies. Sometimes the competition we want isn't in the cards, and treating the symptoms really is the right answer. If that necessary-but-low-volume medication has sharply declining costs with increasing production, as many things do, there just aren't going to be enough suppliers to build a competitive market. Competition policy is great, but it can't do everything.

munificent 4y ago

> Specifically, every morning, RealPage provides participating Lessors with recommended price levels. ... If Lessors wish to diverge from the “approved pricing” they must submit reasoning for doing so and await approval. ... But RealPage emphasizes the need for discipline among participating Lessors and urges them that for its coordinated algorithmic pricing to be the most successful in increasing rents, participating Lessors must adopt RealPage’s pricing at least 80% of the time. It's hard to imagine a clearer, more blatant description of cartel price fixing. This is like calling your pyramid scheme "Pyramidal Inc.".

peoplearepeople 4y ago
> await approval Sure seems like RealPage is price fixing then
- vel0city 4y ago
  The approval wouldn't be from RealPage, it would be from that employee's supervisor. Essentially, one can configure RealPage (and RealPage seems to make this suggestion) to use their auto-price tool by default and require management approvals if employees want to set the price to something else. If I'm buying a Playstation at Walmart, chances are the person at the checkout counter can't change the price directly and give me a discount. They probably can call over a manager who could approve a price change because they can see I'm a really cool person who should get $50 off this Playstation.
  - solarmist 4y ago
    No, the article is very clear. There is approvals team that that has to press the button in addition to management. To slow down/increase friction the process even more.
    - vel0city 4y ago
      > There is approvals team that that has to press the button in addition to management. I agree the article is very clear. The approvals team is the management of the property. From the article: > If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required. This snippet is in the "..." from the above comment. Funny they snipped out this extremely critical part of the quote to show who does the approval. Where does it say RealPage employees need to approve the price?

kilotaras 4y ago

What you see here is not price-fixing, but expedited price-discovery. What is problematic (to society generally and renters specifically) is the fact that this price-discovery is done in the market with artificially constrained supply. Prices raise because people are willing to pay that much for dwelling. People are willing to pay that much, because supply doesn't keep with demand. ## Why I don't consider this a case of price-fixing Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view. There's very strong incentive to defect from "optimal vacancy rate" and eat outsized profit compared to the rest of competition. Making building easier makes consolidation harder, as outsiders are now potential defectors as well. AFAIK we're not in monopoly situation (yet?) for rental properties.

dangerlibrary 4y ago
What you see here is literally the definition of cartel price fixing. OPEC engages in price fixing. It is unstable, as you say, but nobody would say "OPEC is a perfect example of the free market functioning exactly as it should, with no price fixing or market manipulation going on."
- sib 4y ago
  OPEC technically engages in supply fixing - the market then sets the price driven by the intersection of the demand curve and the (fixed) supply. If OPEC reduced supply and users of oil reduced demand by more than that same percentage, prices would likely drop.
- Aunche 4y ago
  The biggest beneficiary of cartels are competitors that are outside the cartel. For example, OPEC enabled fracking to be profitable. To hurt fracking, they loosened their price fixing. If RealPage were price fixing rather than simply facilitating price discovery, landlords would have no incentive pay for the service.
  - dangerlibrary 4y ago
    > The biggest beneficiary of cartels are competitors that are outside the cartel. This is just... obviously wrong. If this were true, nobody would ever join a cartel, since membership is voluntary. All antitrust legislation and enforcement would be rendered entirely moot, because nobody would ever collude to fix prices.

jconley 4y ago

Housing is not a right in the US. It's a for-profit endeavor. Unless that fundamental thing changes expect rents to go up as much as the market will bear and landlords to do everything to make as much profit as possible. Side note: I doubt this is actually "AI". Probably some heuristics.

stewx 4y ago
And this is totally fine as long as the supply side of the market is allowed to react and build more supply in response.
- sixo 4y ago
  Though, even if the supply side was immediately opened up, some redistribution is justified to make up for the historical lack of capacity and the inevitable decade it would take to catch up with demand.
MonkeyMalarky 4y ago
Your mere existence without profiting others is practically criminal.
- sixo 4y ago
  Well, no, not to defend it really, but the premise is that your use of the amenities of modern society, which people put a lot of effort into creating, is earned by providing profit to others, not merely an entitlement. This conflicts with our moral sense (in part because there's nowhere you can go to opt out) so we backstop it with entitlement programs. But the premise is a least in principle fairly sound; not as evil as what you articulated.
smt88 4y ago
> Housing is not a right in the US Price-fixing is not a right in the US. It's explicitly illegal. We as citizens should be strongly opposed to anything that makes housing more expensive because it contributes to homelessness, which is much more expensive than just forcing landlords to actually compete with each other (you know, like the free market is supposed to). The biggest threat to a competitive market isn't the government in the US. It's the accumulation of power by a small number of actors who control the majority of the supply side.

newaccount74 4y ago

Holy shit, how bad is that? People have been saying that market demand is the reason for rising rents, but in reality it's just landlords colluding to fix prices and leaving units empty to create artificial scarcity? This is worse than I thought.

denimnerd42 4y ago
They’ve been doing this manually with NYC storefronts forever. Now the automation exists (and has for at least 10 years) to do it globally. Yikes. i say at least 10 years as that’s the last time I rented. My apartment definitely used this software then and realpage hq is just across the street.
- jareklupinski 4y ago
  if you search nybits.com (i think the last nyc apartment aggregator that sorts by date), you can see a daily flood of realpage-adminstered buildings shifting their units' prices up or down a few dollars every day I don't think they do this on purpose; when I called one of the buildings I was interested in, their leasing agent was surprised I could even see the 'real price'...
anonymouskimmer 4y ago
It's both, not an either/or.
rootusrootus 4y ago
It's not just landlords, no. Some people want to force urbanization, so the government creates urban growth boundaries to limit sprawl. But then many of the people inside the boundary don't want high density housing near them, so they support zoning to keep it away. And mostly I don't think landlords are the ones leaving units empty -- it's investment groups that don't want to have tenants in the first place, they don't want to be landlords, they just want an asset that grows in value. There is a very legitimate supply problem, and blaming landlords won't solve it. They only have the leverage they do because the government gave it to them. We could make the gov't back off if we wanted to, but by and large we don't seem to want to.

matchbok 4y ago

This is the natural result of policies that make it difficult to build new housing. Landlords only have immense power in areas where demand outstrips supply.

maxsilver 4y ago
This is not true. Landlords have immense power everywhere, even in markets where supply far outstrips demand. (Much of the non-coastal US are places where supply far outstrips demand for many years, and landlords are still immensely powerful here) You still have to break up price fixing cartels like this. You can't just lean back and pretend "moar supply" will magically fix anything.
- matchbok 4y ago
  As a landlord, I can tell you this is false. A good tenant for cheap rent is worth much more than a few extra bucks. Have you owned rental housing before? Didn't think so. The cute comments ("moar supply") signify your ignorance on the various aspect of the housing market at large. And that is an unproductive comment that demonstrates your overall lack of understanding of the issue at hand. This "cartel" is a symptom, not a cause. Nobody is price fixing sedans, are they? I wonder why. Oh, supply of hundreds of options and price points? Hmmmm....

solarmist 4y ago

A thought I had just now is that historically prices were static until an event happened to cause in increase, now prices are becoming dynamic and monotonically increasing unless an event happens. The price collusion is greed/growing pains for prices being dynamic by default. This is another social norm that is being discarded by modern society. In the past, you didn’t go to a store two days in a row and see different prices without a good reason.

none_to_remain 4y ago
Inflation is not a new phenomenon
- solarmist 4y ago
  It’s not, but they way we dealt with it has changed.
saulpw 4y ago
I go to the grocery store multiple times a week and see different prices for things I buy. They are constantly changing prices, with sales and offers and 2-for-1. I know this is to confuse me into not knowing what the "real" price of a good is, so that when I run out of ketchup I'm somehow fine paying $8 for a bottle.
- solarmist 4y ago
  Yup. That is another example of this exact same thing. Probably the more common one.

wpietri 4y ago

So what would the opposite of this look like? What software could we make for renters that would increase their market power?

koromak 4y ago
I'm not sure theres an angle of attack here. People need to live somewhere, they don't get to argue the terms.
- wpietri 4y ago
  Leases can definitely be negotiable, even as an individual. I've done it! But I'm wondering what could be done if, like RealPage, we enable collaboration.
- toast0 4y ago
  Most people have options... A single person can rent a whole house, a 2 bedroom apartment, a 1 bedroom, a studio, or just a room out of a larger unit (or part of a shared room). And choose from a range of locations.
  - maxbond 4y ago
    A wealthy single person can muse between renting an entire house or subletting a single room, sure. For most people these options are worlds apart, and they wouldn't entertain both of them at once.
DoctorOW 4y ago
Realpage isn't the only software in that space. A software which finds the lowest possible rents and keeps Realpage as a last resort would be useful. It'd be difficult to monetize.
nvr219 4y ago
Develop software to help manage a tenants' union and software to help them find lawyers to help with collective bargaining.

duped 4y ago

The software engineers who develop this should be ashamed of themselves. You're making the world worse.

htag 4y ago
I know plenty of software engineers that are also landlords. It seems like a clever sort of hack to earn a paycheck from a company that is increasing the value of your investments.
zethus 4y ago
Hey now, they're just trying to make enough money to pay their ever-increasing rent! /s

jeffbee 4y ago

You know, there just aren't that many vacancies. If you want to break this cartel you need inventory. I recently crawled all the listings in my county that are hosted by marketing company Engrain, and the problem is there just aren't that many. The only buildings with a lot of vacancies are new ones that are still leasing up. https://observablehq.com/@jwb/survey-of-east-bay-apartment-vacancies https://observablehq.com/@jwb/survey-of-east-bay-apartment-v...

tonymet 4y ago

Policymakers are not giving enough attention to the impact of phony pricing signals like this. See also Zillow Score / Redfin price. You can inflate prices if you have a broad effect . A good example is a study of payday loans that tend to move upward due to price signals set by local lawsn

more_corn 4y ago

Perhaps we should refer to it as “landlord price collusion software” Call a spade a spade.

neilv 4y ago

The style of this article isn't quite something that I'd want to forward to my state AG's office. It'd be easier to forward reporting by the WaPo or NYT that makes a credible case for price-fixing.

rgovostes 4y ago
That would be https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...

matt3210 4y ago

#vanlife !!

makestuff 4y ago

I check my NYC apartment website at least 2-3x per week since my renewal is coming up soon. The variance between pricing is insane. There is a 2k delta between 1br apartments on the SAME FLOOR, and the cheaper one is the better layout. They change every week though by hundreds of dollars. It makes absolutely zero sense to me.

hn_20591249 4y ago
I got a rental raise for a 1 bedroom in Bushwick from $2700 to $3500. I told them this was unreasonable for the area, but they refused to budge on the price, offering a paltry $50 discount. That apartment eventually got re-rented for $2700 according to StreetEasy as they couldn't find tenants at the price point they (or the "algorithm") wanted.
- HDThoreaun 4y ago
  Many people are willing to pay more to not move, especially if they're in a walk up. Forcing returning tenants to pay more seems like one of the first moves landlords would try.

EGreg 4y ago

It is part of a much larger trend with AI: https://news.ycombinator.com/item?id=34928179 https://news.ycombinator.com/item?id=34928179

pizzaknife 4y ago

real page isnt the only prop management software corp doing this, i know first hand(and quitting that job was a great feeling).

trollerator23 4y ago

This is a friggin' cartel and somebody should be doing jail time

shaaaaawn 4y ago

This post hits close to home and could not be more accurate satire of the pains of property management. I spent a number of years building a competitor to RealPage's Resident Portal, ActiveBuilding (shoutout https://henrihome.com https://henrihome.com). RealPage and Yardi dominate the industry with some of the worst software imaginable. The price fixing and competitiveness in the industry is a feature not a bug. ActiveBuilding basically built thefacebook.com for residents where the sticky feature was online rent payment. They of course got bought by RealPage which continued to operate it as is for a long time with few improvements, but landlords were tied to the ecosystem and didn't really care about the resident experience as long as they could pay rent online and submit maintenance requests. Also who the F decided that they don't need spaces in Product names over there?! ActiveBuilding RealPage. Rant over

Animats 4y ago

Sellers hate a free market where they have to compete on price. They don't want to live in fear of the other guy cutting their price and stealing their market share. You need a monopoly to win. That's the whole premise of Thiel's "Zero to One", and indeed, the VC community. YCombinator would never fund something that had to compete on price, unless there was some huge price advantage possible.

gaoshan 4y ago

When rent gets like this (very high and controlled by a cartel as appears to be the case here) then there needs to be a remedy and the free market isn't going to be it. If the subject were some luxury good that was being impacted it would be of much less concern but this is housing. It's a fundamental human necessity and it's being manipulated. The ideal here should be to cause the least harm. To everyone involved. Landlords should not be ruined but even more important should be the right of people to reasonable housing costs. Again, this is not a luxury... it's a basic human requirement and since it appears to be getting out of hand there needs to be a remedy. The only group powerful enough to provide that remedy, in our system, is the government.

crooked-v 4y ago
The remedy would be taking every city over a certain population, slam dunking local restrictive zoning and permitting straight into the trash, and replacing it with permissive "shall issue" zoning at the state or national level, in the style of Japan [1]. There's no great mystery here. There just aren't enough housing units in the places people actually want to live, and local cities are keeping it that way. [1]: http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
- lotsoweiners 4y ago
  So should I just take my valuable but older real estate and have it leveled to rebuild similar amount of units but now luxury versions for much higher rent or sell to future land developers?

indymike 4y ago

This is just naked collusion as a service. The lawsuits will be spectacular.

rglover 4y ago

Just had a tangentially related conversation about a similar-ish process that restaurant managers/chains use to figure out viability of new locations. They just blindly use software to tell them if the community size/traffic flow will generate revenue relative to costs. Seeing this article, too, along with a dozen other personal anecdotes (and seeing the early stages of blind-trust in AI), I'm realizing we're moving toward a point where over-trust in "what the computer says" is going to have material effects on civilization. Ironically, the "Terminator Scenario," won't be what destroys us. Instead, it will be people's brains turning to mush due to over-reliance on AI/algos/etc. We'll simply hit a point where few if any people exist who understand the analog side of what the software is automating.

ROTMetro 4y ago

Just like last time RealPage came up, submit complaints to the FTC against that people! It only works if you actually use the system. The system isn't just magic. https://reportfraud.ftc.gov/ https://reportfraud.ftc.gov/

tristor 4y ago

Software like this is why I agreed to a rent of $X prior while applying for a lease, and after income verification was returned a rent of $X+30% on the final lease agreement, with an excuse that "it took us several business days to process and rents are recalculated daily based on current market conditions." Which, I knew, intuitively was utter bullshit and they just wanted to fuck me over some more than they already were because they found out I made decent money as a tech worker. Of course, I'm in a bad rental market, and this place was a better option than others, so we sucked it up and took it, and that's why I'm paying nearly $4k/mo in rent when it should be around $3k/mo in the current market (and since prices have fallen, probably closer to $2500/mo). It's super-scummy behavior and if it weren't "washed" through this software, would be blatantly illegal. Why do we allow these "loopholes" where a company exists to essentially help other companies directly break the law in spirit, but barely not in letter?