5 ms·

My own experience with this: I don't know whether it was RealPage being used, but when I was leaving my apartment outside of D.C., I wanted to extend my lease

by RayVR 3y ago

My own experience with this: I don't know whether it was RealPage being used, but when I was leaving my apartment outside of D.C., I wanted to extend my lease by 3 months, into December. A very normal occurrence. I went to the leasing office and asked to extend. We sat down and they typed some info into the computer. They said I could get the lease extension for 50% more than my current rate per month. This seemed ludicrous so I asked why it was so expensive. They calmly explained about the new software they were using which set the rates for all new leases, which they were not authorized to override. They said the increased cost was due to the very large new building which went up a couple blocks away. Not owned by the same company. The building had been completed around December the year before. Many tenants were expected to be leaving around that time when their 1-year lease was up. I couldn't believe this could be legal and asked the agent how this was legal to collude with another building. He said it sure seemed odd but all of the buildings in this city had just started using this software. This was just some guy working in a leasing office but he claimed it was because the boom in high-rise apartments in the city had created too much competition and the owners had all agreed to use this software to fix that. Eventually, after some back-and-forth, I learned that changing my lease end date by a couple days reduced the rent increase from 50% to 5%. So I ended up with a 3 month and 6 day extension.

Sebguer 3y ago
I got a renewal notice a few months ago, and they wanted to raise my already pretty high rent by like 15%. It was higher than what they charge for brand new apartments, not even counting leasing incentives. I made a counter-offer and got told 'we don't negotiate'. The propublica article (https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...) talks about how exactly this lack of negotiation / removing the human element lets them drive up rents across the board. It's insane, and toxic.
- thelastgallon 3y ago
  Experienced the same system in the Bay Area. Rent increases by 300 - 500, but the new lease is lower. You can try signing a lease on a new apartment and deal with the logistics of moving, having some period of extension/overlapping rent payment, which is a huge hassle and may not even save you money.
  - jonhohle 3y ago
    Why would they want to add the expense of cleaning out an additional apartment, additional wear and tear, and pissing off a tenant who is likely to leave in the future only to collect less rent for the privilege? There must be some MBAs involved in that brilliant maneuver.
    - lumost 3y ago
      If you have nowhere to go, then the rent is whatever the landlord says it is.
      - dctoedt 3y ago
        That's why the top marginal tax rate for incomes is too low: Landlords (and other rentiers) have little disincentive to try to maximize their incomes at the expense of everyone else.
    - koolba 3y ago
      It’s a game of chicken.
    - landedgentry 3y ago
      My landlord uses RealPage and the property manager told me they (my building) target a 50% churn rate. If fewer than 50% of households move out at the end of their lease, they know they're not increasing rents fast enough.
      - dwaltrip 3y ago
        That’s insane.
    - jm4 3y ago
      Because they calculate they are more willing to do that than the tenant is willing to move. It only costs them a month or two of the difference in rent they are going to charge a new tenant. They still make thousands more in the end. Meanwhile, the tenant has to pay more money to move than it costs the landlord to rent the place again. The landlord knows they so they offer an extension at an increase of about the same amount it would cost to move. They are betting they can do absolutely nothing and make more money. Even if they lose that bet, they still make more money. There is zero downside when there is high demand for housing and other landlords are doing the same thing.
notyourwork 3y ago
All too eerily similar to my experience in both a Seattle and a San Francisco apartment. The whole thing reeked of illegal collusion.
dataviz1000 3y ago
This is how dynamic pricing for event tickets works. Everyone uses the same software which prices tickets across all secondary and primary markets. One way to create artificial scarcity to inflate prices is not offer tickets or apartments for rent. Another way is to initially charge outrageous prices so that a less outrageous price is more appealing. Like a parent paying outrageous prices for a Taylor Swift concert months in advance insure that their child can see the show for their birthday people looking for apartments are forced at the artificially inflated prices because that location has their employment and social connections.
autoexec 3y ago
> They said the increased cost was due to the very large new building which went up a couple blocks away. Not owned by the same company. The system is beyond broken when an increase in the supply of housing by a competitor results in higher prices for everybody.
- freeone3000 3y ago
  Well, you see, the new fancy construction has to pay off its construction loans so it has to rent at an increased price. The small apartment buildings have to match it, or they’re simply leaving money on the table.
- thwarted 3y ago
  Yeah, this makes no sense and is pretty blatantly bogus to anyone with at least a high school understanding of supply and demand and is also pretty blatant collusion. They didn't also trot out gentrification, due to the new building going up, as a reason to raise the rent too?
- WillPostForFood 3y ago
  You shouldn't always expect prices to go down when there is new supply, because it can also increase demand. If people are investing and building new units in a neighborhood, it is usually improving it, which makes it more desirable, more people want to live in the area, and prices go up. If you are lucky, this reduces demand elsewhere and overall prices might drop.
  - epistasis 3y ago
    No, you should absolutely expect prices to drop, it's extremely well documented. However, landlord advocates spread the counter narrative, of people mistaking symptom for cause, and unsophisticated public laps it up. People hate to see change and want to blame new buildings for high prices, even though they lower them universally.
    - fgonzag 3y ago
ethbr1 3y ago
> he claimed it was because the boom in high-rise apartments in the city had created too much competition and the owners had all agreed to use this software to fix that. Rent homogenization software is doing the same thing realtor associations have done for years -- offer incentives to users who hold the line on "standard" pricing and penalizing those that don't. Then wrap the above scheme up in something more convoluted so it doesn't immediately look like collusion.
treyd 3y ago
My building also uses RealPage and I got the lease renewal notice the other day. I was on the way out when I saw the note so I skimmed it and only saw the "20% increase" number not realizing it was for if I wanted to switch to a month-to-month lease. When I read it fully later it ended up only being a ~3% lease for a full year, which is actually kinda reasonable considering other rents I saw in the area on Zillow. Very strange. (Boston.)
zzleeper 3y ago
Also around DC area, the leasing office folks told me that the price changed dynamically and could only be overruled by the HQ. They said that many companies use that software in order to obtain their "optimal" price for the area, which is of course observationally equivalent to colluding with extra steps. BTW, more recently I saw the same thing with large contractor companies. One quoted me an insane price for something and I asked why, and they replied that it's the price that the software (ServiceTitan) tells them to charge, and even showed me their screen. Again, they said ServiceTitan decides the price depending on "the average price of other companies in the area" which is code word for you-know-what.
- devchix 3y ago
  Am I missing the obvious here, a smart and nimble company can corner this market by lowering their price by X. They would have to give up X per unit but they make it up by (volume * lower_price). Isn't that how the market is supposed to work? Like if I want all the business and there's not an obvious differentiator I will compete on price?
  - dchftcs 3y ago
    Not sure about smart, but the word "nimble" can never be used to described anything about real estate.
  - junofan 3y ago
    Typically the price fixing part is one small feature of a large software suite, and deviations require written justification submitted to the provider (with the implied threat of losing access to the management software).
  - koube 3y ago
    That's not how it works because there is no volume. You can't provide more supply if there's no supply to provide. Each building has a fixed number of units and the management for those buildings are trying to maximize the value they get out of each unit. Most cities have a mostly inelastic number of units and population grows every year, so you can pretty much charge whatever you want and people will pay it since there's no alternatives. Why doesn't someone just build a new building? Mostly they will be blocked by NIMBYism. NIMBYism is a near universal philsophy, to the point that renters who would benefit from this are typically NIMBYs too. Sometimes they're the loudest NIMBYs, It will be pretty much impossible to build anything new until the state takes control of building away from localities and forces them to allow building.

by RayVR 3y ago

Sebguer 3y ago

I got a renewal notice a few months ago, and they wanted to raise my already pretty high rent by like 15%. It was higher than what they charge for brand new apartments, not even counting leasing incentives. I made a counter-offer and got told 'we don't negotiate'. The propublica article (https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...) talks about how exactly this lack of negotiation / removing the human element lets them drive up rents across the board. It's insane, and toxic.

thelastgallon 3y ago
Experienced the same system in the Bay Area. Rent increases by 300 - 500, but the new lease is lower. You can try signing a lease on a new apartment and deal with the logistics of moving, having some period of extension/overlapping rent payment, which is a huge hassle and may not even save you money.
- jonhohle 3y ago
  Why would they want to add the expense of cleaning out an additional apartment, additional wear and tear, and pissing off a tenant who is likely to leave in the future only to collect less rent for the privilege? There must be some MBAs involved in that brilliant maneuver.
  - lumost 3y ago
    If you have nowhere to go, then the rent is whatever the landlord says it is.
    - dctoedt 3y ago
      That's why the top marginal tax rate for incomes is too low: Landlords (and other rentiers) have little disincentive to try to maximize their incomes at the expense of everyone else.
  - koolba 3y ago
    It’s a game of chicken.
  - landedgentry 3y ago
    My landlord uses RealPage and the property manager told me they (my building) target a 50% churn rate. If fewer than 50% of households move out at the end of their lease, they know they're not increasing rents fast enough.
    - dwaltrip 3y ago
      That’s insane.
  - jm4 3y ago
    Because they calculate they are more willing to do that than the tenant is willing to move. It only costs them a month or two of the difference in rent they are going to charge a new tenant. They still make thousands more in the end. Meanwhile, the tenant has to pay more money to move than it costs the landlord to rent the place again. The landlord knows they so they offer an extension at an increase of about the same amount it would cost to move. They are betting they can do absolutely nothing and make more money. Even if they lose that bet, they still make more money. There is zero downside when there is high demand for housing and other landlords are doing the same thing.

notyourwork 3y ago

All too eerily similar to my experience in both a Seattle and a San Francisco apartment. The whole thing reeked of illegal collusion.

dataviz1000 3y ago

This is how dynamic pricing for event tickets works. Everyone uses the same software which prices tickets across all secondary and primary markets. One way to create artificial scarcity to inflate prices is not offer tickets or apartments for rent. Another way is to initially charge outrageous prices so that a less outrageous price is more appealing. Like a parent paying outrageous prices for a Taylor Swift concert months in advance insure that their child can see the show for their birthday people looking for apartments are forced at the artificially inflated prices because that location has their employment and social connections.

autoexec 3y ago

> They said the increased cost was due to the very large new building which went up a couple blocks away. Not owned by the same company. The system is beyond broken when an increase in the supply of housing by a competitor results in higher prices for everybody.

freeone3000 3y ago
Well, you see, the new fancy construction has to pay off its construction loans so it has to rent at an increased price. The small apartment buildings have to match it, or they’re simply leaving money on the table.
thwarted 3y ago
Yeah, this makes no sense and is pretty blatantly bogus to anyone with at least a high school understanding of supply and demand and is also pretty blatant collusion. They didn't also trot out gentrification, due to the new building going up, as a reason to raise the rent too?
WillPostForFood 3y ago
You shouldn't always expect prices to go down when there is new supply, because it can also increase demand. If people are investing and building new units in a neighborhood, it is usually improving it, which makes it more desirable, more people want to live in the area, and prices go up. If you are lucky, this reduces demand elsewhere and overall prices might drop.
- epistasis 3y ago
  No, you should absolutely expect prices to drop, it's extremely well documented. However, landlord advocates spread the counter narrative, of people mistaking symptom for cause, and unsophisticated public laps it up. People hate to see change and want to blame new buildings for high prices, even though they lower them universally.
  - fgonzag 3y ago

ethbr1 3y ago

> he claimed it was because the boom in high-rise apartments in the city had created too much competition and the owners had all agreed to use this software to fix that. Rent homogenization software is doing the same thing realtor associations have done for years -- offer incentives to users who hold the line on "standard" pricing and penalizing those that don't. Then wrap the above scheme up in something more convoluted so it doesn't immediately look like collusion.

treyd 3y ago

My building also uses RealPage and I got the lease renewal notice the other day. I was on the way out when I saw the note so I skimmed it and only saw the "20% increase" number not realizing it was for if I wanted to switch to a month-to-month lease. When I read it fully later it ended up only being a ~3% lease for a full year, which is actually kinda reasonable considering other rents I saw in the area on Zillow. Very strange. (Boston.)

zzleeper 3y ago

Also around DC area, the leasing office folks told me that the price changed dynamically and could only be overruled by the HQ. They said that many companies use that software in order to obtain their "optimal" price for the area, which is of course observationally equivalent to colluding with extra steps. BTW, more recently I saw the same thing with large contractor companies. One quoted me an insane price for something and I asked why, and they replied that it's the price that the software (ServiceTitan) tells them to charge, and even showed me their screen. Again, they said ServiceTitan decides the price depending on "the average price of other companies in the area" which is code word for you-know-what.

devchix 3y ago
Am I missing the obvious here, a smart and nimble company can corner this market by lowering their price by X. They would have to give up X per unit but they make it up by (volume * lower_price). Isn't that how the market is supposed to work? Like if I want all the business and there's not an obvious differentiator I will compete on price?
- dchftcs 3y ago
  Not sure about smart, but the word "nimble" can never be used to described anything about real estate.
- junofan 3y ago
  Typically the price fixing part is one small feature of a large software suite, and deviations require written justification submitted to the provider (with the implied threat of losing access to the management software).
- koube 3y ago
  That's not how it works because there is no volume. You can't provide more supply if there's no supply to provide. Each building has a fixed number of units and the management for those buildings are trying to maximize the value they get out of each unit. Most cities have a mostly inelastic number of units and population grows every year, so you can pretty much charge whatever you want and people will pay it since there's no alternatives. Why doesn't someone just build a new building? Mostly they will be blocked by NIMBYism. NIMBYism is a near universal philsophy, to the point that renters who would benefit from this are typically NIMBYs too. Sometimes they're the loudest NIMBYs, It will be pretty much impossible to build anything new until the state takes control of building away from localities and forces them to allow building.