10 ms·

This is very interesting to me. Even if landlords had no interest in colluding, if they all use the same software to decide on prices, it seems like it could am

This is very interesting to me. Even if landlords had no interest in colluding, if they all use the same software to decide on prices, it seems like it could amount to the same thing. In reality, the case against the landlords and RealPage seems stronger than that, but I find even the theoretical case interesting.

lukas099 3y ago
I wonder if there is upward pressure on housing prices due to Zillow's Zestimate feature? Or on used car prices due to Kelley Blue Book?
- voisin 3y ago
  Or AirBNB hosts relying on its pricing feature.
- lsmeducation 3y ago
  They mostly just look at most recent sales in the area. It sounds simple, but can be bewildering. Just because everyone gobbled up mortgages at low interest rates in 2020, does not mean you can keep pricing houses at 2020 levels. But that's exactly what the housing market keeps doing because they simply care about the last max bid/sale.
  - spicyusername 3y ago
    At the end of the day people will only pay what they will pay. Data like Zillow's Zestimate may impact the prices that people start with, but supply and demand take care of the rest. I think that the lack of housing supply in most markets and higher demand for housing is what is keeping prices inflated. If anything, this shows how high prices _would have gone_ had the interest rates stayed low, given that they are still high with today's high mortgage rates lowering demand.
    - conqrr 3y ago
      I don't think supply and demand would autofix the issue. When a baseline is set, everyone believes it to be the new price. Same as how when a lie is repeated multiple times, it can dangerously become the false truth.
      - nightski 3y ago
        Everyone might believe it is the new price, but that doesn't mean they are willing to pay it.
        lukas099 3y ago
        After years of prices being 'high' yet continuing to rise, they night just accept it.
        nightski 3y ago
        If they do accept it, that means the market is right and the house is really worth that much to someone :)
    - mistrial9 3y ago
      > At the end of the day people will only pay what they will pay. this is empty verbage -- the money supply is run by groups of people i.e. the tender is tendered by tenders. Those comfortable with double-dipping into the cash supplies and using it to boost asset prices, did so with gusto. The rest of society suffers with a small (governing,lending) few benefiting mightily. The "copium" statements by the intellectually uncurious, those who are benefitting, and those that are perpetrating, come off like this vacuous non-statement above.
      - ipaddr 3y ago
        In the end you can only pay with the money you have. If rents go to a million and you are making $15 an hour you can't pay (no one can) and prices drop. Keeping adding people and not housing supply and prices will go up. Remove people and add housing supply and prices will go down
  - lotsofpulp 3y ago
    >But that's exactly what the housing market keeps doing because they simply care about the last max bid/sale. "The housing market" is, by far, individual home sellers. Home sellers without sufficient incentive to sell can afford to wait for a higher prices. They are getting massive utility from the house already, they live in it, they might have no reason to sell if they cannot get a sufficiently high price. Barring loss of income, death, or something else that really motivates a home owner to sell, there is little reason for homeowners to sell the property at a price they deem too low. Hence increasing supply is the only way to lower prices, because an empty house usually has has negative utility (property tax, maintenance, security, etc), so the seller (home builders) are far more motivated to sell it.
- tkahnoski 3y ago
  Definitely think housing is more easily manipulated since there's little standardization of the condition of a house or the materials or features that would drive pricing. (sq foot, # bedrooms/bathrooms/pool/garage size, year built). Everything else is neighborhood comparative sales. The auto world works a little different since there is an entire wholesale operation behind the scenes that also drives pricing. There are several alternatives to KBB although less targeted to consumers. Also way more standardized in condition reporting.... but I know too much about the industry.
  - fasthands9 3y ago
    I'm not so certain. There are only like a dozen car makers. In any meaningful city in America there are going to be several hundred, if not thousand, landlords. It seems hard to manipulate in that sense. Despite conspiracy theories - landlords are highly incentivized not to let apartments sit empty without rent coming in. I do think that the introduction of software has probably made price discovery more efficient and gives landlords more confidence that if they raise rents, they will easily have offers even if the current tenants leave.
    - kube-system 3y ago
      Yes, the are thousands of what technically qualifies as a 'landlord' in every city, but the distribution of landlords by property type skews strongly. Units with >10 units are owned by a relatively few number of large landlords with many properties. Properties with 1 or 2 units are often owned by individuals with one or maybe a couple properties. So depending on the neighborhood, properties there might be owned by lots of different small-time landlords or it might be just a couple of large corporate landlords. For some of the more desirable and built-up urban neighborhoods, small individually owned properties are all but bought up and almost all of the units are in large complexes owned by large corporate landlords.
      - fasthands9 3y ago
        I would just wager the number of people locked in to a super specific neighborhood is not that large. Even so I don't think the power law distribution is that extreme here compared to other parts of the economy. I live in NYC. The housing market sucks here - but I don't think its because of collusion in setting prices. The supply just isn't as high as demand (and millions of voters who already own property seem fine with that)
- delfinom 3y ago
  Perhaps a little however, neither Zillow nor Kelly Blue Book are legally obligating you to ask for permission to sell lower like RealPage did with their terms of use.
- Zigurd 3y ago
  Cars at least have regular auctions in the used market, which is also where slow-selling new cars can end up. Because cars depreciate, only rarely is it a good idea to hold on to a car if your business is to sell cars. Adding transparency, and a tax incentive to fill vacant rentals, could make rent prices less sticky.
- xyzelement 3y ago
  // I wonder if there is upward pressure on housing prices due to Zillow's Zestimate feature? I would be surprised if this were the case. It's supply and demand. Imagine there are 20 houses available for sale in a small area. The Zestimate for each is 1.5M. But I see they are sitting on the market a long time, and I don't see a full open house. If I am going to bid on one, am I bidding 1.5? Nope. I am gonna bid way less because I perceive the market is in my favor (more supply than demand) Opposite scenario. Only one house for sale. The Zestimate is the same 1.5M. The open house is mobbed. Am I going to bid 1.5? No, because I gotta bit higher if I want this house because the market is not in my favor (more demand than supply.) The Zestimate is useful in the 2nd case because it tells me what a similar house in the area went for, so I have an idea of how much people are willing to pay, and go higher than them. But I am not going to actually bid high unless I see the market shape that way.
  - lotsofpulp 3y ago
    I have noticed Zillow removing listing history for houses in my area. If the house does not sell, then sometimes it is taken off the market and the fact that it was listed for sale and the prices and the dates are deleted. Or a house where the seller is dropping prices for many months will have the old data deleted, and the history only shows that it was just put up for sale at a lower price than before. I don't know if this is a feature of MLS, but Zillow already had the data, so I cannot think of a reason that they would remove the data unless they wanted to hide the fact that the houses are not moving at the original prices.
    - xyzelement 3y ago
      That's very weird. I've definitely seen "price reduction history" on listings when I was looking for a house a few years ago. BTW this is one of those cases where having an agent helps you. A good agent will be able to tell you "oh there's a lot of houses coming on the market, getting no bids, and coming off" if you don't pick up that insight yourself.
      - lotsofpulp 3y ago
- callalex 3y ago
  These days Kelly Blue Book only exists so that insurance companies can rip off their customers by underpaying when totaling out a car.
  - userinanother 3y ago
    It used to have too high a value so that you can get paid well but you get screwed on registration costs
- Arainach 3y ago
  No one reading either of those sources is obligated to use the price or prohibited from selling lower.
jeffbee 3y ago
[flagged]
- lsmeducation 3y ago
  What about the time component? Holding a market wide price even for a month can demoralize anyone into accepting the rent if you need to move in a month. Time pressure is the multiplier here. You cannot wait out being homeless by being combative against unreasonable rent.
- jetrink 3y ago
  The key difference is this: > [E]very morning, RealPage provides participating Lessors with recommended price levels. Lessors typically must communicate to a RealPage “Pricing Advisor” that they have “accept[ed]” or “confirm[ed] the “approved pricing” within a specified time frame. 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. This organization was enforcing 'discipline' among the participants to make sure that they didn't undercut each other too often. That's a cartel. 1. https://cohost.org/morayati/post/925436-i-saw-real-page-s-cra https://cohost.org/morayati/post/925436-i-saw-real-page-s-cr...
  - jeffbee 3y ago
    [flagged]
    - ensignavenger 3y ago
      Did you read the complaint? Some of those allegations are absolutely cited in the complaint.
    - zmgsabst 3y ago
      They spell it out explicitly, starting in section two. And so obviously do so, I can’t take your comment as in good faith. https://oag.dc.gov/sites/default/files/2023-11/DC%20OAG%20RealPage%20Complaint%20-%20Filed.pdf https://oag.dc.gov/sites/default/files/2023-11/DC%20OAG%20Re... Eg, paragraph 57 spells out exactly the allegation you’re saying isn’t there.
bko 3y ago
Charging what others charge is called the market price. You may want to charge less to attract more customers from competitors, or charge more and try to differentiate your product. Customers do the same thing. They look at price and shop around. Collusion where a group agrees to charge more than the market price together is bad (and illegal). Its worse for the individual supplier as they could charge less and get more revenue, but done collectively can have a potential for a higher total revenue given everyone obeys. But there is always an incentive to cheat and make more individually while hurting everyone else collectively. Which is why the legally enforceable aspect is important But these aren't the same thing
- pixelatedindex 3y ago
  I thought what they did was this: Get Apartment A to raise rents and enforce these increased rates. Then go to Apartment B and say “look you gotta raise your prices to the market rate, apartment A is doing it so you can too”. Then go back to A and say “hey the market can bear this price, why don’t you raise your rent?” They also encourage owners to keep units vacant (which they should be able to afford if they’re getting prices to go up) rather than rent at a cheaper price. So this feels like collusion to me. But they also say “Everything we do is legal!” - and if that’s the case we need better laws and regulation to avoid this type of behavior. It’s like a distributed cartel - you can’t charge SF rates in Baltimore but what if you could get Baltimore rates to go up by X% YoY with this tactic? Seems unfair.
  - lsmeducation 3y ago
    And higher rent means the valuation of the property goes up. All the incentives are there for them to do this, we just all need to really convince ourselves they would never do such a thing. ...
    - bko 3y ago
      Investors aren't stupid. If you're financing a building with high rents but high vacancy, it's pretty obv and their revenue will necessarily be lower than charging market price (which is by definition the profit maximizing price to charge). If someone can figure out the con on a message board unrelated to real estate I'm pretty sure investors financing this stuff could figure it out as well

lukas099 3y ago

I wonder if there is upward pressure on housing prices due to Zillow's Zestimate feature? Or on used car prices due to Kelley Blue Book?

voisin 3y ago
Or AirBNB hosts relying on its pricing feature.
lsmeducation 3y ago
They mostly just look at most recent sales in the area. It sounds simple, but can be bewildering. Just because everyone gobbled up mortgages at low interest rates in 2020, does not mean you can keep pricing houses at 2020 levels. But that's exactly what the housing market keeps doing because they simply care about the last max bid/sale.
- spicyusername 3y ago
  At the end of the day people will only pay what they will pay. Data like Zillow's Zestimate may impact the prices that people start with, but supply and demand take care of the rest. I think that the lack of housing supply in most markets and higher demand for housing is what is keeping prices inflated. If anything, this shows how high prices _would have gone_ had the interest rates stayed low, given that they are still high with today's high mortgage rates lowering demand.
  - conqrr 3y ago
    I don't think supply and demand would autofix the issue. When a baseline is set, everyone believes it to be the new price. Same as how when a lie is repeated multiple times, it can dangerously become the false truth.
    - nightski 3y ago
      Everyone might believe it is the new price, but that doesn't mean they are willing to pay it.
      - lukas099 3y ago
        After years of prices being 'high' yet continuing to rise, they night just accept it.
        nightski 3y ago
        If they do accept it, that means the market is right and the house is really worth that much to someone :)
  - mistrial9 3y ago
    > At the end of the day people will only pay what they will pay. this is empty verbage -- the money supply is run by groups of people i.e. the tender is tendered by tenders. Those comfortable with double-dipping into the cash supplies and using it to boost asset prices, did so with gusto. The rest of society suffers with a small (governing,lending) few benefiting mightily. The "copium" statements by the intellectually uncurious, those who are benefitting, and those that are perpetrating, come off like this vacuous non-statement above.
    - ipaddr 3y ago
      In the end you can only pay with the money you have. If rents go to a million and you are making $15 an hour you can't pay (no one can) and prices drop. Keeping adding people and not housing supply and prices will go up. Remove people and add housing supply and prices will go down
- lotsofpulp 3y ago
  >But that's exactly what the housing market keeps doing because they simply care about the last max bid/sale. "The housing market" is, by far, individual home sellers. Home sellers without sufficient incentive to sell can afford to wait for a higher prices. They are getting massive utility from the house already, they live in it, they might have no reason to sell if they cannot get a sufficiently high price. Barring loss of income, death, or something else that really motivates a home owner to sell, there is little reason for homeowners to sell the property at a price they deem too low. Hence increasing supply is the only way to lower prices, because an empty house usually has has negative utility (property tax, maintenance, security, etc), so the seller (home builders) are far more motivated to sell it.
tkahnoski 3y ago
Definitely think housing is more easily manipulated since there's little standardization of the condition of a house or the materials or features that would drive pricing. (sq foot, # bedrooms/bathrooms/pool/garage size, year built). Everything else is neighborhood comparative sales. The auto world works a little different since there is an entire wholesale operation behind the scenes that also drives pricing. There are several alternatives to KBB although less targeted to consumers. Also way more standardized in condition reporting.... but I know too much about the industry.
- fasthands9 3y ago
  I'm not so certain. There are only like a dozen car makers. In any meaningful city in America there are going to be several hundred, if not thousand, landlords. It seems hard to manipulate in that sense. Despite conspiracy theories - landlords are highly incentivized not to let apartments sit empty without rent coming in. I do think that the introduction of software has probably made price discovery more efficient and gives landlords more confidence that if they raise rents, they will easily have offers even if the current tenants leave.
  - kube-system 3y ago
    Yes, the are thousands of what technically qualifies as a 'landlord' in every city, but the distribution of landlords by property type skews strongly. Units with >10 units are owned by a relatively few number of large landlords with many properties. Properties with 1 or 2 units are often owned by individuals with one or maybe a couple properties. So depending on the neighborhood, properties there might be owned by lots of different small-time landlords or it might be just a couple of large corporate landlords. For some of the more desirable and built-up urban neighborhoods, small individually owned properties are all but bought up and almost all of the units are in large complexes owned by large corporate landlords.
    - fasthands9 3y ago
      I would just wager the number of people locked in to a super specific neighborhood is not that large. Even so I don't think the power law distribution is that extreme here compared to other parts of the economy. I live in NYC. The housing market sucks here - but I don't think its because of collusion in setting prices. The supply just isn't as high as demand (and millions of voters who already own property seem fine with that)
delfinom 3y ago
Perhaps a little however, neither Zillow nor Kelly Blue Book are legally obligating you to ask for permission to sell lower like RealPage did with their terms of use.
Zigurd 3y ago
Cars at least have regular auctions in the used market, which is also where slow-selling new cars can end up. Because cars depreciate, only rarely is it a good idea to hold on to a car if your business is to sell cars. Adding transparency, and a tax incentive to fill vacant rentals, could make rent prices less sticky.
xyzelement 3y ago
// I wonder if there is upward pressure on housing prices due to Zillow's Zestimate feature? I would be surprised if this were the case. It's supply and demand. Imagine there are 20 houses available for sale in a small area. The Zestimate for each is 1.5M. But I see they are sitting on the market a long time, and I don't see a full open house. If I am going to bid on one, am I bidding 1.5? Nope. I am gonna bid way less because I perceive the market is in my favor (more supply than demand) Opposite scenario. Only one house for sale. The Zestimate is the same 1.5M. The open house is mobbed. Am I going to bid 1.5? No, because I gotta bit higher if I want this house because the market is not in my favor (more demand than supply.) The Zestimate is useful in the 2nd case because it tells me what a similar house in the area went for, so I have an idea of how much people are willing to pay, and go higher than them. But I am not going to actually bid high unless I see the market shape that way.
- lotsofpulp 3y ago
  I have noticed Zillow removing listing history for houses in my area. If the house does not sell, then sometimes it is taken off the market and the fact that it was listed for sale and the prices and the dates are deleted. Or a house where the seller is dropping prices for many months will have the old data deleted, and the history only shows that it was just put up for sale at a lower price than before. I don't know if this is a feature of MLS, but Zillow already had the data, so I cannot think of a reason that they would remove the data unless they wanted to hide the fact that the houses are not moving at the original prices.
  - xyzelement 3y ago
    That's very weird. I've definitely seen "price reduction history" on listings when I was looking for a house a few years ago. BTW this is one of those cases where having an agent helps you. A good agent will be able to tell you "oh there's a lot of houses coming on the market, getting no bids, and coming off" if you don't pick up that insight yourself.
    - lotsofpulp 3y ago
callalex 3y ago
These days Kelly Blue Book only exists so that insurance companies can rip off their customers by underpaying when totaling out a car.
- userinanother 3y ago
  It used to have too high a value so that you can get paid well but you get screwed on registration costs
Arainach 3y ago
No one reading either of those sources is obligated to use the price or prohibited from selling lower.

jeffbee 3y ago

[flagged]

lsmeducation 3y ago
What about the time component? Holding a market wide price even for a month can demoralize anyone into accepting the rent if you need to move in a month. Time pressure is the multiplier here. You cannot wait out being homeless by being combative against unreasonable rent.
jetrink 3y ago
The key difference is this: > [E]very morning, RealPage provides participating Lessors with recommended price levels. Lessors typically must communicate to a RealPage “Pricing Advisor” that they have “accept[ed]” or “confirm[ed] the “approved pricing” within a specified time frame. 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. This organization was enforcing 'discipline' among the participants to make sure that they didn't undercut each other too often. That's a cartel. 1. https://cohost.org/morayati/post/925436-i-saw-real-page-s-cra https://cohost.org/morayati/post/925436-i-saw-real-page-s-cr...
- jeffbee 3y ago
  [flagged]
  - ensignavenger 3y ago
    Did you read the complaint? Some of those allegations are absolutely cited in the complaint.
  - zmgsabst 3y ago
    They spell it out explicitly, starting in section two. And so obviously do so, I can’t take your comment as in good faith. https://oag.dc.gov/sites/default/files/2023-11/DC%20OAG%20RealPage%20Complaint%20-%20Filed.pdf https://oag.dc.gov/sites/default/files/2023-11/DC%20OAG%20Re... Eg, paragraph 57 spells out exactly the allegation you’re saying isn’t there.

bko 3y ago

Charging what others charge is called the market price. You may want to charge less to attract more customers from competitors, or charge more and try to differentiate your product. Customers do the same thing. They look at price and shop around. Collusion where a group agrees to charge more than the market price together is bad (and illegal). Its worse for the individual supplier as they could charge less and get more revenue, but done collectively can have a potential for a higher total revenue given everyone obeys. But there is always an incentive to cheat and make more individually while hurting everyone else collectively. Which is why the legally enforceable aspect is important But these aren't the same thing

pixelatedindex 3y ago
I thought what they did was this: Get Apartment A to raise rents and enforce these increased rates. Then go to Apartment B and say “look you gotta raise your prices to the market rate, apartment A is doing it so you can too”. Then go back to A and say “hey the market can bear this price, why don’t you raise your rent?” They also encourage owners to keep units vacant (which they should be able to afford if they’re getting prices to go up) rather than rent at a cheaper price. So this feels like collusion to me. But they also say “Everything we do is legal!” - and if that’s the case we need better laws and regulation to avoid this type of behavior. It’s like a distributed cartel - you can’t charge SF rates in Baltimore but what if you could get Baltimore rates to go up by X% YoY with this tactic? Seems unfair.
- lsmeducation 3y ago
  And higher rent means the valuation of the property goes up. All the incentives are there for them to do this, we just all need to really convince ourselves they would never do such a thing. ...
  - bko 3y ago
    Investors aren't stupid. If you're financing a building with high rents but high vacancy, it's pretty obv and their revenue will necessarily be lower than charging market price (which is by definition the profit maximizing price to charge). If someone can figure out the con on a message board unrelated to real estate I'm pretty sure investors financing this stuff could figure it out as well