5 ms·

If this tool allows a market to be a bit collude-y, it may add a bit to rents, and it's worth suing them to see what comes out. But that software won't get you

by davidw 3y ago

If this tool allows a market to be a bit collude-y, it may add a bit to rents, and it's worth suing them to see what comes out. But that software won't get you LA rents in Houston. The macro picture is still supply and demand and we have to intervene there if we want housing to be more affordable in the places people want to live. People are so desperate for some bogeyman to blame. Institutional investors! RealPage! Short Term Rentals! Fixing those things would not hurt, to be clear, but lack of supply is the underlying issue, and it's often driven by local NIMBYism. I went to a hearing to support the construction of 40 "units" (aka homes) in my city last week and got jeered at by a crowd of older, wealthy retirees who were SO ANGRY about those being built. That same sort of scene (often with no one to speak in favor) is replayed day in and day out all across the country. This isn't to say 'markets solve all problems' but legalizing a variety of housing is very much a step that your local city council can take. It's a worthwhile issue to be involved in, because housing is at the nexus of so many other things - the economy, the environment, people's ability to live where they fit in best and much more. These groups are good: * https://new.yimbyaction.org/ https://new.yimbyaction.org/ * https://welcomingneighbors.us/ https://welcomingneighbors.us/

kthejoker2 3y ago
From the article > Critics say the cooperation between RealPage and apartment managers has emboldened landlords to raise prices even if it means more units are left empty when tenants are forced to leave. Without RealPage, the plaintiffs argue, landlords would be hesitant to jack up rents; instead, they'd focus on keeping their buildings full. So it sounds like in some point this is depressing utilization of existing stock. And given that it is (literally) rent-seeking and no one else can build an apartment there that they would rent, it seems like it's exacerbating any supply issues we're experiencing.
- davidw 3y ago
  Right, like I wrote, it's probably jacking rents up some. But empty units are empty units and too many of them means you need to lower prices or you are losing out on money because you don't make anything from empty homes. And whatever effects this has (I'm curious to see what comes out off the lawsuit), you're just not going to be able to say "wow, look at how much landlords in San Francisco are making.... gosh, I want to double my rents!" if you're in a place without a tightly constrained housing supply.
  - objektif 3y ago
    I think you are really not understanding the issue. Unless you have crazy supply of apartments this software can have dramatic effect on prices. You are vastly underestimating the impact of this price fixing. Example from my own building: we have an apartment that has been sitting idle since last 6+ months. Price of it has been going up!!!
    - jslaby 3y ago
      I think this type of service may be used elsewhere as well. There was a video of Ford dealer with massive stock of trucks, but still charging the dealer markup. I really hope they(congress) are looking into this in all aspects as it really does skirt the spirit of anti-competitive laws.
    - davidw 3y ago
      > I think you are really not understanding the issue. Yeah, I'm the one that goes to city council meetings and hearings and reads book after book, and talks with the state economists here in Oregon and I don't understand it? It doesn't take "a crazy supply" of apartments to create competition. It's why apartments cost less in Las Vegas than Los Angeles - there are more to go around relative to the demand.
  - katbyte 3y ago
    the problem is they are making more money by having a few units empty while renting the rest at higher rents. the landlord is making more money, people are being squeezed for all they got, and less people have homes. this is a huge drag on the economy and adversely affects every single person in a region except the rent seeking landlords. Even if you own it is a negative as your CoL is going to go up as stores need to charge more to pay employees more so they can afford homes.
    - chucksta 3y ago
      So someone has to step up and be squeezed for all they've got so people have homes? Who is going to volunteer for that?
- carllerche 3y ago
  The easy solution is to tax vacancy at a rate that makes this strategy not profitable.
  - Y_Y 3y ago
    Canada and the UK (among others) have toyed with these kind of "use it or lose it" penalties for unnecessary empty premises. I think they're a great idea, but they don't seem popular, maybe because the benefits are spread widely while the costs are paid by relatively few, but politically powerful, landowners.
- Y_Y 3y ago
  To add some clarity for those of us not so au fait with the terminology, rent-seeking refers to economic rent, which here is the different in the apartment rental price actually charged (with the benefit of RealPage) and the price that would otherwise arise in a market which was free of collusion. The argument is that free markets are (somewhat) efficient and mean that we use our finite resources (like land) in the manner which generates the greatest economic benefit. Normally if you rent-seek by trying to jack up a price above what the market would dictate, someone will come along and out-compete you. The trouble is that it's difficult or impossible for someone to to produce a substitute good here, if there's no empty lot on the street and all the prices are artificially high then how can I come along and compete on price offering apartments on the same street?
- ethagknight 3y ago
  Realpage is just a tool, and the landlord can use it different ways. We use it to help us optimize for occupancy so that we dont have units sitting vacant, AND so we can better manage our vacancy over slow periods. It is downright magical at times how it has seemed to predict softening market conditions when I thought the software was simply recommending discounts left and right An owner choosing to let a unit sit vacant for an extended period is probably more worried about "tenants rights" (squatters) and how difficult it is to evict. You can't blame software if an owners chooses to destroy his real avg rents by letting units sit vacant longer than necessary. 3 months of vacancy to score a 1 year lease, but the opex bills keep coming... no thanks.
  - onjectic 3y ago
    Collusion is just a tool, an illegal one, but a tool nonetheless. You say RealPage is magical, I think it’s just evidence of its control over the housing market, not clairvoyance. It self-fulfills whatever prophecy it comes up with. And these prophecies seem to always predict ever increasing prices(excluding high frequency noise), far above what the market would normally allow. Renting is supposed to have risks, without these risks it probably wouldn’t even be allowed in modern society. Landlords are well within their right to find creative ways to mitigate them, but it can’t involve breaking the very same set of societal rules their tenants are following, there is nothing creative about that. If only criminals targeted criminals, but they always go after the easiest victims.
    - ethagknight 3y ago
      Serious question… is the stock market collusion? Sellers looking at each others work, agreeing on a price? There’s a very healthy, active and open market for apartment rents in most cities. If you are posting from somewhere with heavy rent controls, government market manipulation, or extreme demand, blame those instead! it’s still a market. I’m not excusing bad actors, but real page is not a scapegoat
      - onjectic 3y ago
        Can you predict the stock market? Just like the rent-market can have price manipulation, so can the stock-market and any other market. It’s absolutely possible for a trading platform to do this through price recommendations, and it would be illegal. The two things being compared here are completely different though. It’s not very useful. Whats the real-life stock equivalent to RealPage? Who even rents stocks? Additionally RealPage is forceful with its price “recommendations”. Imagine if a trading platform forced you to buy/sell a certain percentage of your stocks at their suggested rate, and file an appeal to opt out.
WalterBright 3y ago
> If this tool allows a market to be a bit collude-y, it may add a bit to rents, and it's worth suing them to see what comes out. When I buy stocks, the price is set across the country, anyone can get a quote and see what it is at the moment. Is that collusion?
- davidw 3y ago
  Housing is more limited geographically and while it's very far from a monopoly, larger providers might have some pull in the market. IDK, we'll see what comes out of the lawsuit, I guess. If more housing gets built, prices fall though, like in Austin.
- renewiltord 3y ago
  Certainly not. But consider an actual hypothetical cartel that is explicitly defacto and dejure price fixing. Suppose the members of this cartel instead create a new LLC. Suppose that new LLC now performs the role of price-fixing with the condition that not conforming will lead to expulsion from the price feed system. Has this transformation taken a cartel that is explicitly colluding and made it into one that is not colluding? If so, we now have a mechanism to turn every cartel into a non-cartel via the umbrella LLC. And the latter costs $300 to set up in Delaware. So the anti-cartel law has a $300 bypass. Reasonable, I suppose if you believe that that law has reached the end of its utility.
  - WalterBright 3y ago
    The trouble with colluding is that if everyone agrees to set the price at $300, another seller can undercut them with a price of $290 and take their business away. Or one of the members of the cartel can agree to sell at $300, and then offer a kickback under the table to get the business, or offer some other cash equivalent incentive. Cartels only work if the government is used to make it illegal to cheat on the cartel.
    - text0404 3y ago
      except this isn't the case. there have been many examples of cartels and collusion in the past.
alexb_ 3y ago
At the end of the day, it keeps coming back to land values and land use. Over and over and over again. Land value tax fixes almost all of these problems - YIMBY is just a good alternative that solves some of the problems while being more easy to sell politically than a rewrite of our entire property tax system.
maxsilver 3y ago
> The macro picture is still supply and demand and we have to intervene there if we want housing to be more affordable in the places people want to live. legalizing a variety of housing is very much a step that your local city council can take. We already did this ages ago -- most cities have already made all the changes you are requesting, years or even a decade ago. Your talking points are like 10 years behind the times, housing is already legal in 99% of the US right now. (basically everywhere that isn't SF / Bay Area). And you can see brand new 5+1s all over every city, as proof of it. (so much so, that press even writes about it - https://www.bloomberg.com/news/features/2019-02-13/why-america-s-new-apartment-buildings-all-look-the-same https://www.bloomberg.com/news/features/2019-02-13/why-ameri... ) Yes, neighbors complain and complain, and it's easy to focus on them, cause they're loud and annoying. But they don't win -- they complain, and then the investors win anyway, and still get to build almost anything they propose. (I'm in the Midwest, and I can count on one hand the number of times an investor lost a proposal -- they get to develop anything they want 99%+ of the time) > People are so desperate for some bogeyman to blame. Institutional investors! RealPage! Short Term Rentals! Well, because those are actual issues, and "NIMBYism" isn't. "NIMBYism" is maybe 2% of the overall housing problem, while private equity, investors, illegal hotels ("Short Term Rentals"), pricing collusion ("RealPage"), and such are, collectively, probably ~50%+ of the problem. There's dozens of problems at play with crazy-high housing prices. "NIMBYism" doesn't even rank among the top ten of them.
- davidw 3y ago
  > We already did this ages ago -- most cities have already made all the changes you are requesting, years or even a decade ago No, they did not. This is divorced from the reality of most cities.
  - maxsilver 3y ago
    > No, they did not. Yes, they did, and you can see it in the metrics. If "new housing" is "not legal", how are we at a 30-year-high in new residential construction? - https://www.reuters.com/markets/us/us-housing-starts-surge-13-month-high-2023-06-20/ https://www.reuters.com/markets/us/us-housing-starts-surge-1... and https://www.bloomberg.com/news/articles/2023-06-20/us-housing-starts-surge-to-a-more-than-one-year-high https://www.bloomberg.com/news/articles/2023-06-20/us-housin... Note that we're also at a nearly 50-year record-high on urban apartment construction as well https://www.axios.com/2023/09/07/apartment-building-construction-record-high https://www.axios.com/2023/09/07/apartment-building-construc... -- the kinds of dense multi-family units that urbanists insist cities "haven't legalized".
locopati 3y ago
something has to be going on nationally because rents even in 2nd and 3rd tier cities are also high (like 1st tier high). there should be some financial benefit to living in a less popular, lower population place that has less access to a great diversity of foods or an art/music scene.
- davidw 3y ago
  Part of it is 'household formation' among millenials. Someone asked this question in the Oregon subreddit, about why the demand for housing has gone up so much even if the population has not. https://oregoneconomicanalysis.com/2023/10/26/household-formation-in-oregon/ https://oregoneconomicanalysis.com/2023/10/26/household-form...
cyanydeez 3y ago
The macro picture is collusions drives up everyone's prices equally. The same collusions occurs in multiple American categories. Americans think the free market lowers prices, but at the scale of macro business interests, it's in large conglomerates interest to raise prices under collusions, as they all win.

by davidw 3y ago

kthejoker2 3y ago

From the article > Critics say the cooperation between RealPage and apartment managers has emboldened landlords to raise prices even if it means more units are left empty when tenants are forced to leave. Without RealPage, the plaintiffs argue, landlords would be hesitant to jack up rents; instead, they'd focus on keeping their buildings full. So it sounds like in some point this is depressing utilization of existing stock. And given that it is (literally) rent-seeking and no one else can build an apartment there that they would rent, it seems like it's exacerbating any supply issues we're experiencing.

davidw 3y ago
Right, like I wrote, it's probably jacking rents up some. But empty units are empty units and too many of them means you need to lower prices or you are losing out on money because you don't make anything from empty homes. And whatever effects this has (I'm curious to see what comes out off the lawsuit), you're just not going to be able to say "wow, look at how much landlords in San Francisco are making.... gosh, I want to double my rents!" if you're in a place without a tightly constrained housing supply.
- objektif 3y ago
  I think you are really not understanding the issue. Unless you have crazy supply of apartments this software can have dramatic effect on prices. You are vastly underestimating the impact of this price fixing. Example from my own building: we have an apartment that has been sitting idle since last 6+ months. Price of it has been going up!!!
  - jslaby 3y ago
    I think this type of service may be used elsewhere as well. There was a video of Ford dealer with massive stock of trucks, but still charging the dealer markup. I really hope they(congress) are looking into this in all aspects as it really does skirt the spirit of anti-competitive laws.
  - davidw 3y ago
    > I think you are really not understanding the issue. Yeah, I'm the one that goes to city council meetings and hearings and reads book after book, and talks with the state economists here in Oregon and I don't understand it? It doesn't take "a crazy supply" of apartments to create competition. It's why apartments cost less in Las Vegas than Los Angeles - there are more to go around relative to the demand.
- katbyte 3y ago
  the problem is they are making more money by having a few units empty while renting the rest at higher rents. the landlord is making more money, people are being squeezed for all they got, and less people have homes. this is a huge drag on the economy and adversely affects every single person in a region except the rent seeking landlords. Even if you own it is a negative as your CoL is going to go up as stores need to charge more to pay employees more so they can afford homes.
  - chucksta 3y ago
    So someone has to step up and be squeezed for all they've got so people have homes? Who is going to volunteer for that?
carllerche 3y ago
The easy solution is to tax vacancy at a rate that makes this strategy not profitable.
- Y_Y 3y ago
  Canada and the UK (among others) have toyed with these kind of "use it or lose it" penalties for unnecessary empty premises. I think they're a great idea, but they don't seem popular, maybe because the benefits are spread widely while the costs are paid by relatively few, but politically powerful, landowners.
Y_Y 3y ago
To add some clarity for those of us not so au fait with the terminology, rent-seeking refers to economic rent, which here is the different in the apartment rental price actually charged (with the benefit of RealPage) and the price that would otherwise arise in a market which was free of collusion. The argument is that free markets are (somewhat) efficient and mean that we use our finite resources (like land) in the manner which generates the greatest economic benefit. Normally if you rent-seek by trying to jack up a price above what the market would dictate, someone will come along and out-compete you. The trouble is that it's difficult or impossible for someone to to produce a substitute good here, if there's no empty lot on the street and all the prices are artificially high then how can I come along and compete on price offering apartments on the same street?
ethagknight 3y ago
Realpage is just a tool, and the landlord can use it different ways. We use it to help us optimize for occupancy so that we dont have units sitting vacant, AND so we can better manage our vacancy over slow periods. It is downright magical at times how it has seemed to predict softening market conditions when I thought the software was simply recommending discounts left and right An owner choosing to let a unit sit vacant for an extended period is probably more worried about "tenants rights" (squatters) and how difficult it is to evict. You can't blame software if an owners chooses to destroy his real avg rents by letting units sit vacant longer than necessary. 3 months of vacancy to score a 1 year lease, but the opex bills keep coming... no thanks.
- onjectic 3y ago
  Collusion is just a tool, an illegal one, but a tool nonetheless. You say RealPage is magical, I think it’s just evidence of its control over the housing market, not clairvoyance. It self-fulfills whatever prophecy it comes up with. And these prophecies seem to always predict ever increasing prices(excluding high frequency noise), far above what the market would normally allow. Renting is supposed to have risks, without these risks it probably wouldn’t even be allowed in modern society. Landlords are well within their right to find creative ways to mitigate them, but it can’t involve breaking the very same set of societal rules their tenants are following, there is nothing creative about that. If only criminals targeted criminals, but they always go after the easiest victims.
  - ethagknight 3y ago
    Serious question… is the stock market collusion? Sellers looking at each others work, agreeing on a price? There’s a very healthy, active and open market for apartment rents in most cities. If you are posting from somewhere with heavy rent controls, government market manipulation, or extreme demand, blame those instead! it’s still a market. I’m not excusing bad actors, but real page is not a scapegoat
    - onjectic 3y ago
      Can you predict the stock market? Just like the rent-market can have price manipulation, so can the stock-market and any other market. It’s absolutely possible for a trading platform to do this through price recommendations, and it would be illegal. The two things being compared here are completely different though. It’s not very useful. Whats the real-life stock equivalent to RealPage? Who even rents stocks? Additionally RealPage is forceful with its price “recommendations”. Imagine if a trading platform forced you to buy/sell a certain percentage of your stocks at their suggested rate, and file an appeal to opt out.

WalterBright 3y ago

> If this tool allows a market to be a bit collude-y, it may add a bit to rents, and it's worth suing them to see what comes out. When I buy stocks, the price is set across the country, anyone can get a quote and see what it is at the moment. Is that collusion?

davidw 3y ago
Housing is more limited geographically and while it's very far from a monopoly, larger providers might have some pull in the market. IDK, we'll see what comes out of the lawsuit, I guess. If more housing gets built, prices fall though, like in Austin.
renewiltord 3y ago
Certainly not. But consider an actual hypothetical cartel that is explicitly defacto and dejure price fixing. Suppose the members of this cartel instead create a new LLC. Suppose that new LLC now performs the role of price-fixing with the condition that not conforming will lead to expulsion from the price feed system. Has this transformation taken a cartel that is explicitly colluding and made it into one that is not colluding? If so, we now have a mechanism to turn every cartel into a non-cartel via the umbrella LLC. And the latter costs $300 to set up in Delaware. So the anti-cartel law has a $300 bypass. Reasonable, I suppose if you believe that that law has reached the end of its utility.
- WalterBright 3y ago
  The trouble with colluding is that if everyone agrees to set the price at $300, another seller can undercut them with a price of $290 and take their business away. Or one of the members of the cartel can agree to sell at $300, and then offer a kickback under the table to get the business, or offer some other cash equivalent incentive. Cartels only work if the government is used to make it illegal to cheat on the cartel.
  - text0404 3y ago
    except this isn't the case. there have been many examples of cartels and collusion in the past.

alexb_ 3y ago

At the end of the day, it keeps coming back to land values and land use. Over and over and over again. Land value tax fixes almost all of these problems - YIMBY is just a good alternative that solves some of the problems while being more easy to sell politically than a rewrite of our entire property tax system.

maxsilver 3y ago

> The macro picture is still supply and demand and we have to intervene there if we want housing to be more affordable in the places people want to live. legalizing a variety of housing is very much a step that your local city council can take. We already did this ages ago -- most cities have already made all the changes you are requesting, years or even a decade ago. Your talking points are like 10 years behind the times, housing is already legal in 99% of the US right now. (basically everywhere that isn't SF / Bay Area). And you can see brand new 5+1s all over every city, as proof of it. (so much so, that press even writes about it - https://www.bloomberg.com/news/features/2019-02-13/why-america-s-new-apartment-buildings-all-look-the-same https://www.bloomberg.com/news/features/2019-02-13/why-ameri... ) Yes, neighbors complain and complain, and it's easy to focus on them, cause they're loud and annoying. But they don't win -- they complain, and then the investors win anyway, and still get to build almost anything they propose. (I'm in the Midwest, and I can count on one hand the number of times an investor lost a proposal -- they get to develop anything they want 99%+ of the time) > People are so desperate for some bogeyman to blame. Institutional investors! RealPage! Short Term Rentals! Well, because those are actual issues, and "NIMBYism" isn't. "NIMBYism" is maybe 2% of the overall housing problem, while private equity, investors, illegal hotels ("Short Term Rentals"), pricing collusion ("RealPage"), and such are, collectively, probably ~50%+ of the problem. There's dozens of problems at play with crazy-high housing prices. "NIMBYism" doesn't even rank among the top ten of them.

davidw 3y ago
> We already did this ages ago -- most cities have already made all the changes you are requesting, years or even a decade ago No, they did not. This is divorced from the reality of most cities.
- maxsilver 3y ago
  > No, they did not. Yes, they did, and you can see it in the metrics. If "new housing" is "not legal", how are we at a 30-year-high in new residential construction? - https://www.reuters.com/markets/us/us-housing-starts-surge-13-month-high-2023-06-20/ https://www.reuters.com/markets/us/us-housing-starts-surge-1... and https://www.bloomberg.com/news/articles/2023-06-20/us-housing-starts-surge-to-a-more-than-one-year-high https://www.bloomberg.com/news/articles/2023-06-20/us-housin... Note that we're also at a nearly 50-year record-high on urban apartment construction as well https://www.axios.com/2023/09/07/apartment-building-construction-record-high https://www.axios.com/2023/09/07/apartment-building-construc... -- the kinds of dense multi-family units that urbanists insist cities "haven't legalized".

locopati 3y ago

something has to be going on nationally because rents even in 2nd and 3rd tier cities are also high (like 1st tier high). there should be some financial benefit to living in a less popular, lower population place that has less access to a great diversity of foods or an art/music scene.

davidw 3y ago
Part of it is 'household formation' among millenials. Someone asked this question in the Oregon subreddit, about why the demand for housing has gone up so much even if the population has not. https://oregoneconomicanalysis.com/2023/10/26/household-formation-in-oregon/ https://oregoneconomicanalysis.com/2023/10/26/household-form...

cyanydeez 3y ago

The macro picture is collusions drives up everyone's prices equally. The same collusions occurs in multiple American categories. Americans think the free market lowers prices, but at the scale of macro business interests, it's in large conglomerates interest to raise prices under collusions, as they all win.