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FBI Raids Big Corporate Landlord over Nationwide Rent Hikes

240 points by ilamont 2y ago

toomuchtodo 2y ago
Cortland Management https://cortland.com/ https://cortland.com/
flerchin 2y ago
Most of my holdings are VTI, so I surely own some of RealPage and any other publicly traded firm like this. I don't care. Burn that entire part of the market. I cannot stomach that my investment returns are on the backs of the homeless.
- aaomidi 2y ago
  I agree. The whole point of these index funds are to be insulated from one company going under.
- lotsofpulp 2y ago
  As noted in the article, RealPage is owned by Thoma Bravo, which is not a publicly listed company.
  - gruez 2y ago
    That's the company that makes the pricing service. That service is used by many more companies, many of which are presumably in the S&P 500.
- strangattractor 2y ago
  I had never really considered how a bunch of similar companies using the same SaaS might actually turn into a monopoly whether intentionally or not. Nice catch FBI or somebody;) Wonder if this is just the tip of an iceberg? What other industries might be doing similar things?
  - throwup238 2y ago
    > Wonder if this is just the tip of an iceberg? What other industries might be doing similar things? Not SaaS specifically, but basically all of healthcare is monopolized through hospital group purchasing organizations.
  - corford 2y ago
    Not sure about stateside but can confirm in Europe the competition law regulators are very hot on this - SaaS platforms being used (willingly or unwittingly) as hub & spoke cartels
  - onjectic 2y ago
    Retail for one, all under the mask of “AI”. Just google “pricing optimization software”. https://www.trustradius.com/pricing-optimization https://www.trustradius.com/pricing-optimization
- whiddershins 2y ago
  This sounds like a clear criminal conspiracy, but nothing in this is directly about homelessness. This notion that homelessness is primarily driven by high rents stands up to zero scrutiny. Especially visible homelessness as in, the people you see sleeping on the street. That is driven by other public health epidemics such as drug addiction and untreated mental health issues. It’s important to get this right, or we won’t be able to solve either of these problems (skyrocketing rents & homelessness).
  - llamaimperative 2y ago
    > This notion that homelessness is primarily driven by high rents stands up to zero scrutiny Ridiculous claim: https://www.pewtrusts.org/en/research-and-analysis/articles/2023/08/22/how-housing-costs-drive-levels-of-homelessness https://www.pewtrusts.org/en/research-and-analysis/articles/...
    - thegrim33 2y ago
      Not taking a side one way or the other, but what you linked to is literally the definition of "correlation is not causation". They noted that in a handful of cities that over a 5 year period housing prices increased and homelessness increased. There's a (weak) correlation. That does not imply causation. There could be any number of explanations for why two things increased in the same time period without one causing the other.
      - llamaimperative 2y ago
        What GP said is it stands up "to zero scrutiny." That is an absolutely absurd claim. There is a mountain of evidence pointing to exactly this. Sure, correlation vs causation blah blah. This correlation persists even when controlling for most other variables people can think of: > A large body of academic research has consistently found that homelessness in an area is driven by housing costs, whether expressed in terms of rents, rent-to-income ratios, price-to-income ratios, or home prices. Further, changes in rents precipitate changes in rates of homelessness: homelessness increases when rents rise by amounts that low-income households cannot afford. Similarly, interventions to address housing costs by providing housing directly or through subsidies have been effective in reducing homelessness. That makes sense if housing costs are the main driver of homelessness, but not if other reasons are to blame. Studies show that other factors have a much smaller impact on homelessness. > Much of the research looks at the variation in homelessness among geographies and finds that housing costs explain far more of the difference in rates of homelessness than variables such as substance use disorder, mental health, weather, the strength of the social safety net, poverty, or economic conditions. Some vulnerabilities strongly influence which people are susceptible to homelessness, but research has repeatedly concluded that these factors play only a minor role in driving rates of homelessness compared with the role of housing costs. A platitude about correlation vs causation is downplaying what we know about this specific situation.
- deleted 2y ago
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jmyeet 2y ago
So this is a fairly recent development: an effective cartel when all the players use the same software that spits out the same numbers. The defense is that they're acting independently and some can choose to use the software or not but that doesn't stand up to reality Unfettered markets create monopoloies and oligopolies. Housing isn't like other goods. If you don't want to buy an air fryer or can't because of price or supply, that's OK. You won't starve. But people need housing and we've built our economy entirely on ever-increasing housing prices. This is a Ponzi scheme. The next generation has to work 3 times as hard or long to pay for your house to get that pricing increase. It's quite literally just theft from the next generation. Except it's worse than that because that threat is backed by state violence: evictions and homelessness. We are quite literally choosing to kill people by witholding a basic human need: shelter.
- gruez 2y ago
  >Unfettered markets create monopoloies and oligopolies. Rental markets aren't "monopoloies" or "oligopolies" by any stretch of the imagination.
  - aaomidi 2y ago
    They are when the pricing for them is set by one or few entities. They’re also a necessary expense. It is the last thing a person can choose not to spend money on.
  - dpflan 2y ago
    Don't quite follow, are you saying that there are too many players for there to be `*opolies`? The FBI seems to disagree, right?
    - gruez 2y ago
      "*opolies" =/= price fixing/collusion, which is what the FBI is investigating them for. Even if you don't have a monopoly but you agree to fix prices with a competitor, it's still illegal.
dpflan 2y ago
""" Well, there’s a civil antitrust action in Tennessee that’s been going on since 2023, where the argument is that RealPage has been working with at least 21 large landlords and institutional investors, encompassing 70% of multi-family apartment buildings and 16 million units nationwide, to systematically push up rents. And RealPage isn’t just some software company distorting rental markets, it’s also owned by Thoma Bravo, one of the biggest private equity firms in the U.S. """
mlazos 2y ago
the whole real page situation irks me to no end. As if being a landlord wasn’t easy enough just milking people they needed even more money by colluding? It’s just obnoxious and I hope it gets the book thrown at it (and its corporate officers, but that might be too much to ask)
- SoftTalker 2y ago
  Being a landlord isn't easy, but that's not an excuse to engage in collusion on pricing.
  - ljsprague 2y ago
    Being my landlord is very easy.
  - oldstrangers 2y ago
    It's exceptionally easy. That's why landlords are able to own hundreds to thousands of properties / units.
    - gruez 2y ago
      >That's why landlords are able to own hundreds to thousands of properties / units. Presumably they have dozens/hundreds of workers to manage those units? I'm not sure how "number of units owned" is indicative of easiness. A quantitative trading firm has billions of dollars under management. Does that mean it's even easier to be a quantitative trading firm?
      - deleted 2y ago
        [deleted]
      - oldstrangers 2y ago
        >Presumably they have dozens/hundreds of workers to manage those units? Correct... which makes being a landlord exceptionally easy. All you have to do is have enough money. There is no cognitive or physical load that a landlord is required to carry, you simply open your checkbook.
FlamingMoe 2y ago
I appreciate that this investigation/raid is being conducted without becoming a major political talking point. Refreshing to see the government simply doing its job.
- aaomidi 2y ago
  At this point I want yearly elections because it seems like election year is the only time the government does its job. Maybe even monthly elections!
  - xenospn 2y ago
    We have elections every two years! Really more than enough.
    - JohnFen 2y ago
      Far more than enough. We're basically always in an election cycle, and always being subjected to all the electioneering BS that brings. It's utterly exhausting and infuriating.
    - anigbrowl 2y ago
      Imagine a job where you only undergo a performance review and the risk of not having your contract renewed once every two years. You have to be George Santos levels of untrustworthy to get ejected by your fellow legislators.
      - leereeves 2y ago
        As it should be. The legislators should be chosen by the people, not by other politicians. And I seriously doubt the people want to choose more than once every two years (many only vote once every four years).
        anigbrowl 2y ago
        This rather misses the point that it's very easy for an incumbent to pass a biannual performance review unless they're massively corrupt or out of touch, which translates to giving politicians an undeserved level of job security.
gedy 2y ago
I'm curious why does RealPage get all the blame in media? I think every property management app does the same type of rent analytics.
- Aloha 2y ago
  https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r... Because of the coercion the company puts on its customers for bucking what their software says to do.
  - gedy 2y ago
    Just seems like what the other PMA apps do too, e.g. Yardi, Buildium, Appfolio Not saying it's okay, just why do we only hear about Realpage
    - stackskipton 2y ago
      Other apps are not just price fixing but property management and reporting though I've seen Realpage type behavior from them. My guess is since Realpage is biggest and their business is all about price fixing, Feds figure convict them, shut them down and MAYBE send exec or two to jail and rest will fall in line so quickly.
- infecto 2y ago
  - RealPage has the majority of the market for big property owners. - RealPage makes the price increases opt-out with required justification.
- bri3d 2y ago
  There are several issues with RealPage versus something like a public-data analytics tool: * RealPage actively suggests a price for each unit without exposing the underlying fundamentals to the customer, rather than displaying aggregate data and allowing the customer to make a pricing decision. * RealPage incorporates private data, including vacancy data, from all participating companies into their pricing model in order to generate a shared agreement about pricing. This information is being voluntarily shared in order to manipulate the market - that is, they broker horizontal collusion between players in a vertical industry. A group of landlords calling each other to say "we're going to make sure the vacancy rate stays at 5.5% this year" or "hey let's make sure we don't let these units go for under market value even though they're empty" would also be illegal collusion, it's just being laundered through an algorithm. This is the big smoking gun that makes it a hub-and-spoke price fixing ring (also called vertically integrated horizontal collusion - ie, a cartel). There's also the part where RealPage bought their main large-scale competitor, Lease Rent Options (who claimed to use only public data, in contrast to RealPage), in a 2017 deal that probably shouldn't have passed antitrust review, so there isn't anyone else to blame (they also own Buildium).
r0m4n0 2y ago
I’m curious what RealPage gets out of all this. Based upon the alleged activities it sounds like price fixing to the layperson but why? Realpage should just be concerned with keeping their saas customers by making a good product. Coordinating this conspiracy sounds like a lot of work for little gain of a software company. As someone who has been the target of an overzealous law enforcement investigation, these investigators love to come up with a larger conspiracy to fit their narrative. It could just be too many properties are owned by a few people and they have too much pricing control over entire regional markets… too bad we don’t have a choice but to pay when you need somewhere to live. I suppose all we can do is speculate until the evidence is shown.
- lotsofpulp 2y ago
  >Coordinating this conspiracy sounds like a lot of work for little gain of a software company. Presumably, RealPage can sell its services for a far higher price with the conspiracy than without. It doesn’t take a genius to periodically poll competing landlord’s rental prices, either via telephone or internet search. What does take a genius is to deliver the benefits of being a cartel and also deliver plausible deniability to avoid legal/punitive costs.
- quasse 2y ago
  > Realpage should just be concerned with keeping their saas customers by making a good product The coordination is the service. Realpage is literally offering CaaS (cartel as a service). The "market insight" would be nearly valueless without the guarantee that Realpage was signing contacts with your competitors that prevents them from undercutting your prices (and vice versa).
- pixl97 2y ago
  > Realpage should just be concerned with keeping their saas customers by making a good product. That's not how late stage capitalism works. Quite often it's closer to winner take all. Think about it this way, you need to buy a piece of management software that costs $1000 per month (or $10,000 whatever, just a healthy chunk of your revenue). They both do the job well enough so they aren't completing on capability. Now imagine one of them earns you 25% more by using it. Well, everyone that rents is going to be interested in that sales pitch. Capitalists like more money for the same expenses.
jupp0r 2y ago
"Landlords adopt RealPage recommendations on pricing 80-90% of the time, which explicitly drives up revenue by holding apartments off the market. " Can somebody explain how holding apartments off the market is driving up revenues?
- lotsofpulp 2y ago
  If enough sellers band together and set a minimum price level for a good with low elasticity of demand (meaning people need it no matter what and will sacrifice other parts of their budget to obtain it, like shelter), then the higher prices could lead to higher revenue even though fewer units are sold (due to higher per unit prices).
  - r00fus 2y ago
    Yes, this is what Cartels do - and that behavior is generally illegal - but requires a government that cracks down on this. In China this level of crime gets you sent to re-education camps or just executed.
- sokoloff 2y ago
  If I have 100 units and set the price such that no unit is ever vacant, that price is surely lower than if I set the price such that 90 or 95 of them are occupied at any given time. If the rent to leave 10% vacant is 11% higher, I basically break-even on cash-flow and have a higher building valuation (on a multiple of rents when fully-rented basis). If it's 12% higher, I make more cashflow (plus giving myself an easier job with more freedom in operations to do medium maintenance between tenants and have units free for temporary dislocations, etc;).
  - SoftTalker 2y ago
    Right, and it works best for large landlords that have hundreds or thousands of units. The small landlord/owner with a couple of houses or condo units is going to want them 100% rented because leaving even one of them vacant is going to be significant impact on revenue.
dudeinjapan 2y ago
Rent-seeking, pun intended.
SoftTalker 2y ago
Anyone here working on tech for RealPage? How do you justify it?
- toyg 2y ago
  Not one of them but I expect they will justify it in the same way as anyone else: bills, food, mortgage, kids, etc etc. Do not blame the exploited, blame the exploiter.
  - hiatus 2y ago
    > Do not blame the exploited, blame the exploiter. I don't see how this can be accepted and yet "just following orders" is viewed negatively.
    - toyg 2y ago
      Godwinizing is the death of discussion. Cooperating in raising rent and cooperating in genocide are different things.
daft_pink 2y ago
I think when they take the step of requiring subscribers to let them set prices, they are clearly violating the law. I’m skeptical that analysis reports telling landlords to raise rent are illegal, but writing in the contract that you have to follow the rules of the association is obvious collusion/cartel behavior.
- SoftTalker 2y ago
  Yep, on one level it could just be automating the task of scanning Zillow and other sites and seeing what other landlords are asking. Any landlord is going to be doing that to some degree. But the price-fixing amongst "competing" landlords is where it goes wrong.
  - phkahler 2y ago
    >> But the price-fixing amongst "competing" landlords is where it goes wrong. I would bet they're spreading the empty units around too, so no landlord ends up with all the empty ones.
    - gruez 2y ago
      Wouldn't that happen organically? The underlying principle of "you want to leave a certain % of your units empty to maximize profits" is microeconomics 101 and doesn't require any coordination between landlords. Without realpage there will probably be a "rule of thumb" to follow, which most landlords will use. They'll in turn set their prices to hit that number, thereby ensuring that the empty units are spread around evenly.
      - mjcl 2y ago
        Correct, and even YieldStar has a customer-set vacancy and lease expiration targets that it works towards. RealPage trains the customers to accept a little more vacancy to gain higher lease pricing.
        2y ago
settsu 2y ago
While this seems like a legal (and moral/ethical) win, I can't help assume there will be no meaningful justice for anyone directly affected by the conspiracy. At best there might eventually be a class action lawsuit filed on behalf of the victims, resulting in a meager payout. Meanwhile the perpetrators will reorganize and lobby their misdeeds into legality.
- QuarterReptile 2y ago
  Justice is an ongoing effort. Its effects span restitution, retribution, and deterrence. If no one in the system ever pursued justice without figuring out how it gets him paid for this transaction, this time, there would be no justice. And all the way down that sliding scale of justice, where the global minimum is basically Haiti, you have increasingly heavy-handed chances to stop the bleeding (e.g. El Salvador.) For more concrete specifics, reorgs and lobbying are both costs, so you can rest content that this effort imposes costs.
mlhpdx 2y ago
Wow. Maybe some folks will consider having their money managers blacklist Thomas Bravo. If this egregious behavior is in the portfolio it may be an outlier, but probably isn't.
- dylan604 2y ago
  Yeah, I seriously doubt the majority financeBros will give 2 shits about the ethics of this company. The only thing they care about is the bottom lines look good on paper. Sure, there maybe funds out there that have some sort of ethics/morals about their investments, but I'm guessing they are very much in the minority
  - mlhpdx 2y ago
    I’m talking about the people the “finance bros” are chasing; the high net worth folks that hire them. They are the ones to compel significant change.
jl2718 2y ago
The fundamental problem here is investment cash flows eclipsing operational cash flows. This invalidates basic economics of supply and demand price equilibrium. In this case, it means that the landlords can restrict supply without losses.
- gruez 2y ago
  1. Opportunity cost is a thing. Even if a vacant unit doesn't cost you anything, you're still leaving money on the table by not renting it out. 2. the propublica article claims that realpage increases overall revenue by renting out less units.
  - supplied_demand 2y ago
    ==Even if a vacant unit doesn't cost you anything, you're still leaving money on the table by not renting it out.== From an economics standpoint, if you rent out 10+ units, having them 100% rented would also indicate that you are leaving money on the table. Maybe there could be a fine/tax for units vacant over 6 consecutive months?
bcarroll22 2y ago
genuine question here, apologies if i missed it in the article, but what's RealPage's crime in this? how is using an algorithm to set prices on apartments more criminal than using an algorithm for anything else we use algorithms for? i'm not saying it's not criminal, i just don't think i understand what american laws they're breaking by doing this.
- stackskipton 2y ago
  They get data from all the subscribers, including non-public data like vacancy/rent agreement length/units being taken off the market for various reasons than use that data to determine prices for the subscribers. DoJ is investigating this as Price Fixing which is criminally illegal in United States.
  - bcarroll22 2y ago
    got it, thanks. so based on this context and some other comments, it seems like the potential crime isn't so much that they use these sources to algorithmically suggest a price or contrived vacancy, it's that their agreement enforces that any of their subscribers has to use their suggestions on price and availability, thus making it likely price fixing. correct?
    - notaustinpowers 2y ago
      There's a few different aspects: They're using non-publicly data provided by their friends/partners to set rental rates. This data includes lease length terms, de-marketing reasons, etc. They then use this data to set a price on a specific unit. If I used their software and was putting a unit up on the market, they would have the price they recommend. If I disagreed with that price, I wouldn't be able to change it. I had to submit an appeal to RealPage, they would review my appeal, and decide if the rental rate was correct or not. I, as the property owner/management company, have lost all ability to set rental rates myself to the complex I own or work for. And due to their pricing being compared to their own units, or to their partners units, this amounts to price fixing.
    - 2y ago
mistersquid 2y ago
The startup I worked for, MyNewPlace based in San Francisco, was acquired by RealPage in 2011. The execs were from Texas and when they presented to the MyNewPlace team, they told us SFers with smug self-satisfaction that drug testing would be required as a condition of employment. I was not and am not a heavy drug user; I am anti-surveillance state. I helped a bunch of fellow devs (including myself) apply for medical marijuana prescriptions (cannabis was not recreationally legal in CA at the time) and when proffered the RealPage offer of employment, I resigned on the spot. This is my look of smug self-satisfaction that the RealPage execs are now under Federal scrutiny for monopoly price-fixing.
- dylan604 2y ago
  I worked for a video/audio/graphics production company that was purchased by a corporate entity. The new corporate daddy has a drug-free policy, and wanted to implement that with the newly purchased employees. I joked and said that anyone that passes that test in this type of industry should be fired. Like, you're just not trying to very hard to be creative if cannabis isn't part of the process. Ultimately, the tests were never administered after tremendous push back. The policy was not revised, but just not bothered with. The funny thing, is this was in a state that I swear will be the absolute last state to allow for any kind of legalized use.
- kstrauser 2y ago
  Bravo! I'm in the same boat: I don't partake, but neither do I want my boss watching me on my day off. Two related stories: 1. A friend went through the same process as you. The whole Bay Area team refused to take the tests. New corporate boss: "But we test everyone!" Local team: "Not here, you don't!" Faced with a choice between firing the entire new acquisition or getting some sanity, the buyer modified their supposedly inviolable policy to exempt CA employees. 2. I was the CISO at a prior gig when an enterprise customer was evaluating our service. They checked all the usual boxes and then asked, "oh, and you do drug test all your employees, right?" The CTO and I looked at each other and I had the privilege of being the one to say, no, we do not and will not test our employees. Either they're performing up to expectations or they're not. That felt great. I had a beer yesterday and I know I won't be in trouble for that. Why should I remotely care whether a coworker smoked a joint at the same time? We're both sober and working today. Edit: CTO and I laughed about it later. What counts as a passing score locally? Is there a minimum value, too, or just a max?
emmelaich 2y ago
In an ideal world, supply would rise because landlords would want to make more money in total. So the question is why isn't supply rising? Is it because existing landlords aren't funding housing construction or the difficulty of entering the market? Surely it cannot be that the supply of land is that limited. Or is it? Due to zoning regulations?
- stass 2y ago
  Land in desirable areas is limited and zoning and other government red-tape prevents high-density housing from being built (or any housing being built period in cases like San Francisco).
- violet13 2y ago
  New construction is rapidly getting more expensive in many of the markets where it's needed the most. While it'd be cool to point to a single factor, it's a combination of several things. People are expecting more (more square footage, higher-end finish), the government is demanding more (environmental and energy regulations), labor is getting costlier, and yes - there's NIMBYism manifesting through zoning laws and other "conservation" rules.
  - llamaimperative 2y ago
    In high cost-of-living areas it's the land price.
    - violet13 2y ago
      Not entirely, but either way, land value is tied to all of that. If the city can't grow due to zoning and conservation rules, and if you can't subdivide existing parcels, you basically have more and more money chasing the same lots. By "not entirely", I mean that while land value often dominates, lowering it doesn't solve the problem, because even if you somehow acquired a city lot for $50k in the Bay Area, you wouldn't be able to build a house on that lot for $100k. So, solving one problem doesn't make it affordable.
- 2y ago
neilv 2y ago
> Landlords adopt RealPage recommendations on pricing 80-90% of the time, which explicitly drives up revenue by holding apartments off the market. As the architect of RealPage once explained, “[i]f you have idiots undervaluing, it costs the whole system.” It’s not just an information-sharing and price recommendation engine. RealPage has ‘pricing advisors’ that monitor landlords and encourage them to accept suggested pricing, it works to get employees at landlord companies fired who try to move rents lower, and it even threatens to drop clients who don’t accept its high price recommendations. This one’s a very clear conspiracy. Allegedly. This raid is potentially glorious. Faith in the system tentatively renewed. I'll keep my fingers crossed for not only certain parties going to prison, but also certain parties being forced to compensate for the huge harm to entire markets and the people in them that they knowingly caused. (IIUC, if a lot of owners collude to manipulate prices, then the rest will also tend go up, because they notice the new "market" price, and they see their costs are going up. And then this has other economic effects, including payroll and retention for small businesses. And presumably also the various costs to society of health and happiness problems, since the economic stresses can be pretty bad for some.)
- toyg 2y ago
  I doubt much punishment will actually happen, beyond some nominal reparations; but it could establish a legacy in the field of SaaS antitrust, which could cool down some of the worst animal instincts in the market.
rconti 2y ago
> And rent in that city has exploded, up 80% since 2016. What’s odd about this price increase is that vacancy rates have been inching up, and when there’s more supply, prices should come down. But they aren’t. I'd be curious to see the vacancy rate data.
- notaustinpowers 2y ago
  I live in Atlanta so I'm familiar with vacancy rates here. This data from Costar shows it's the highest in the nation and has gone up around 60% around 7.5% to 12% since Q1 2021. https://www.costar.com/article/961023632/atlanta-multifamily-vacancy-rate-doubles-in-two-years-now-highest-among-large-us-markets https://www.costar.com/article/961023632/atlanta-multifamily...
  - rconti 2y ago
    Wow. That sounds like a LOT more than "inching up". I got the feeling from the article it must be significant, but their use of the term "inching up" made me think maybe it was somehow not all that great.
dzonga 2y ago
I remember in college, one of the classes you're required to take for CS is Ethics For Engineers. I wonder if VC's or people with Finance background are required to take Ethics classes.
- EVa5I7bHFq9mnYK 2y ago
  I worked at a bank, in equities. There were Ethics and similar online courses every week, with exams. We just shared exam answers in our group chat. With that, blindly clicking through the course and clicking the right answers was ~10 minutes.
- stemlord 2y ago
  I feel it's not that they don't know how to be ethical so much as it is they don't care
  - cyanydeez 2y ago
    Yeah, seems like there's a majority at the top of the ladder who want to pretend all this stuff is naive meanderings of capitalism and not a concerted effort to pull up the latter of prosocialism that worked for many decades until black people got equal rights.
- gowld 2y ago
  Nearly all of Finance theory is Ethics, but with the vector pointing in the opposite direction.
muro 2y ago
I wish they would look into wage fixing across companies too - where at least "big tech" shares / buys salary data across all their competitors, so they don't have to increase wages - they fix them by being consistent across that dataset. Seems to be the same thing, just in a different "market"
- gruez 2y ago
  >I wish they would look into wage fixing across companies too - where at least "big tech" shares / buys salary data across all their competitors, so they don't have to increase wages - they fix them by being consistent across that dataset. If this is "wage fixing" by the employer, what does this say about sites like levels.fyi for employees? Is that also "wage fixing"?
  - flerchin 2y ago
    Public data sharing is allowed.
- Aloisius 2y ago
  The DOJ had safe harbor guidelines for the sharing of price and wage surveys through a third-party intermediary as long as it was sufficiently old and aggregated to prevent determining the prices/wages of a specific competitor. Those guidelines were rescinded by the Biden administration last year due to concerns that algorithms eroded the distinctions between past/aggregated and current/disaggregated data.
wellthisisgreat 2y ago
Take them apart. Housing should not be a way to make investments at scale. Not while there is a housing crisis One thing is owning your house and wanting it’s value to appreciate, another is cornering people to bleed them dry leveraging the fear of homelessness
- Nasrudith 2y ago
  But making investment at scale is how you get more of something!
ElijahLynn 2y ago
Rent Control Creates Communities No Rent Control Destroys Communities
- spacephysics 2y ago
  Very black and white take, no rent control also implies no monopolies/price fixing behavior which is illegal and the point of this post. “Rent Control” is just price fixing in favor of the consumer, but has also a litany of issues including the quality of the community formed Example if rent control forces prices down, but inflation makes the cost of maintenance high, then cost cutting will be done (poor service, poor landscaping, outdated appliances, less renovations, less security). Saying to just do rent control is just as bad as saying let free market run wild regardless of price fixing/collusion
msie 2y ago
Heh, on Twitter, I was arguing against someone who thought that a corporation buying up apts and renting them out would result in lower rents. C'mon really?
Apreche 2y ago
Is there a source for this story?
zackmorris 2y ago
I first heard about the RealPage price fixing conspiracy on TikTok. It wasn't this video, but very similar (he swears at the 1:35 mark so use headphones if needed): https://www.tiktok.com/@newsforthought/video/7159031342439796014 https://www.tiktok.com/@newsforthought/video/715903134243979... What's going on is that Vanguard, BlackRock and (other?) private equity firms have bought up huge swaths of real estate in the US as secure investments. This started around 20 years ago when financial advisers like Suze Orman recommended Vanguard as a vehicle for retirement savings alongside a 401k, Roth IRA, etc: https://www.suzeorman.com/resources/mutual-funds https://www.suzeorman.com/resources/mutual-funds https://www.oprah.com/money/financial-freedom-by-suze-orman https://www.oprah.com/money/financial-freedom-by-suze-orman (2008) Now during a slow housing market, private equity firms are holding land and housing, rather than selling for a loss like banks did when the 2008 housing bubble popped. Due to a weak economy post-pandemic, inflation driven by corporate greed to prevent losses by the wealthy during those ~2 years that labor stayed home from the workplace, and high interest rates which resulted from the Federal Reserve trying to slow that inflation. Their infinite holds have resulted in record high rents and mortgages due to low volatility from lack of competition. Depending on how the presidential election goes, and if there's a recession or stagflation in the following year(s), private equity firms will likely find themselves under increasingly high pressure to sell and free up capital to pay their investors dividends. Then private equity firms may go to the federal government for a bailout just like Fannie Mae and Freddie Mac did. Basically Gen X, Millennials and Gen Z on Main Street will be asked to bail out private equity firms on Wall Street to save the retirements of Boomers. The key difference between the Housing Bubble popping and today being that people under 50 have been under the yoke this whole millennium: underemployed, working excessive hours and multiple jobs while being denied raises/savings/retirements and even having their social safety net slowly dismantled (for example the unemployment work search requirement used to deny benefits after the mid-2000s) since the economy became financialized after the 2000 Dot Bomb. At every turn, rather than investing in stuff like automation and renewable energy, prioritizing work/life balance like in Scandinavian countries, or even promoting unions/guilds/cooperatives, the US outsourced 100,000 factories under the GW Bush Administration and stonewalled nearly all pro-labor programs under the Obama Administration. Leaving us with a monopolized and duopolized economy that nickel and dimes working people and blocks them from participating in capital investment by labeling low-dollar trades as "pattern day trading" in 2001, for example: https://en.wikipedia.org/wiki/Pattern_day_trader https://en.wikipedia.org/wiki/Pattern_day_trader After a lifetime of exploitation, it's a bit like the Lannisters having to go to the Iron Bank when their gold mines stopped producing. Or billionaires who can't find where all of the money went, begging young people for their last penny so their grandparents can retire in dignity. It.. raises some eyebrows to say the least. RealPage may be the first in a long chain of dominoes that leads to young people having real leverage over moneyed interests. It will be curious to see how they respond - whether they bow to the status quo or organize to demand structural changes in the economy like during the Progressive Era, New Deal and post-WWII economic expansion before trickle-down Reaganomics flatlined wages as productivity increased after 1980.
thrownaway561 2y ago
wake me when someone actually get indicted. i highly doubt anything comes of this especially when the article mentions that realpage has lobbying going on.
antisthenes 2y ago
Hopefully the health insurance industry is next. They siphon way more money out of the general populace than COVID rent increases.
jauntywundrkind 2y ago
It's weird thinking of FBI raids like this. Like, what's even in the office that matters? All the data, all the systems will be in AWS or some other cloud. No one's gonna be slowed down for a second by not being at their desk. I can scarcely imagine what would be required to try to prevent this. Call up AWS and order them to block a bunch of ports, hope there's no jumpboxes or vpns on odd ports? Run deep packet inspection and hope there aren't web terminals in use? Assuming you do get network access, assuming you're not afraid of employees messing around while you are raiding, it's still a nightmare. The office systems and the product are probably just so convoluted & interwoven in most companies.
tombayoumi 2y ago
Does anyone know how to figure out who their clients are or were?

240 points by ilamont 2y ago

Cortland Management https://cortland.com/ https://cortland.com/

Most of my holdings are VTI, so I surely own some of RealPage and any other publicly traded firm like this. I don't care. Burn that entire part of the market. I cannot stomach that my investment returns are on the backs of the homeless.

aaomidi 2y ago
I agree. The whole point of these index funds are to be insulated from one company going under.
lotsofpulp 2y ago
As noted in the article, RealPage is owned by Thoma Bravo, which is not a publicly listed company.
- gruez 2y ago
  That's the company that makes the pricing service. That service is used by many more companies, many of which are presumably in the S&P 500.
strangattractor 2y ago
I had never really considered how a bunch of similar companies using the same SaaS might actually turn into a monopoly whether intentionally or not. Nice catch FBI or somebody;) Wonder if this is just the tip of an iceberg? What other industries might be doing similar things?
- throwup238 2y ago
  > Wonder if this is just the tip of an iceberg? What other industries might be doing similar things? Not SaaS specifically, but basically all of healthcare is monopolized through hospital group purchasing organizations.
- corford 2y ago
  Not sure about stateside but can confirm in Europe the competition law regulators are very hot on this - SaaS platforms being used (willingly or unwittingly) as hub & spoke cartels
- onjectic 2y ago
  Retail for one, all under the mask of “AI”. Just google “pricing optimization software”. https://www.trustradius.com/pricing-optimization https://www.trustradius.com/pricing-optimization
whiddershins 2y ago
This sounds like a clear criminal conspiracy, but nothing in this is directly about homelessness. This notion that homelessness is primarily driven by high rents stands up to zero scrutiny. Especially visible homelessness as in, the people you see sleeping on the street. That is driven by other public health epidemics such as drug addiction and untreated mental health issues. It’s important to get this right, or we won’t be able to solve either of these problems (skyrocketing rents & homelessness).
- llamaimperative 2y ago
  > This notion that homelessness is primarily driven by high rents stands up to zero scrutiny Ridiculous claim: https://www.pewtrusts.org/en/research-and-analysis/articles/2023/08/22/how-housing-costs-drive-levels-of-homelessness https://www.pewtrusts.org/en/research-and-analysis/articles/...
  - thegrim33 2y ago
    Not taking a side one way or the other, but what you linked to is literally the definition of "correlation is not causation". They noted that in a handful of cities that over a 5 year period housing prices increased and homelessness increased. There's a (weak) correlation. That does not imply causation. There could be any number of explanations for why two things increased in the same time period without one causing the other.
    - llamaimperative 2y ago
      What GP said is it stands up "to zero scrutiny." That is an absolutely absurd claim. There is a mountain of evidence pointing to exactly this. Sure, correlation vs causation blah blah. This correlation persists even when controlling for most other variables people can think of: > A large body of academic research has consistently found that homelessness in an area is driven by housing costs, whether expressed in terms of rents, rent-to-income ratios, price-to-income ratios, or home prices. Further, changes in rents precipitate changes in rates of homelessness: homelessness increases when rents rise by amounts that low-income households cannot afford. Similarly, interventions to address housing costs by providing housing directly or through subsidies have been effective in reducing homelessness. That makes sense if housing costs are the main driver of homelessness, but not if other reasons are to blame. Studies show that other factors have a much smaller impact on homelessness. > Much of the research looks at the variation in homelessness among geographies and finds that housing costs explain far more of the difference in rates of homelessness than variables such as substance use disorder, mental health, weather, the strength of the social safety net, poverty, or economic conditions. Some vulnerabilities strongly influence which people are susceptible to homelessness, but research has repeatedly concluded that these factors play only a minor role in driving rates of homelessness compared with the role of housing costs. A platitude about correlation vs causation is downplaying what we know about this specific situation.
deleted 2y ago
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jmyeet 2y ago

So this is a fairly recent development: an effective cartel when all the players use the same software that spits out the same numbers. The defense is that they're acting independently and some can choose to use the software or not but that doesn't stand up to reality Unfettered markets create monopoloies and oligopolies. Housing isn't like other goods. If you don't want to buy an air fryer or can't because of price or supply, that's OK. You won't starve. But people need housing and we've built our economy entirely on ever-increasing housing prices. This is a Ponzi scheme. The next generation has to work 3 times as hard or long to pay for your house to get that pricing increase. It's quite literally just theft from the next generation. Except it's worse than that because that threat is backed by state violence: evictions and homelessness. We are quite literally choosing to kill people by witholding a basic human need: shelter.

gruez 2y ago
>Unfettered markets create monopoloies and oligopolies. Rental markets aren't "monopoloies" or "oligopolies" by any stretch of the imagination.
- aaomidi 2y ago
  They are when the pricing for them is set by one or few entities. They’re also a necessary expense. It is the last thing a person can choose not to spend money on.
- dpflan 2y ago
  Don't quite follow, are you saying that there are too many players for there to be `*opolies`? The FBI seems to disagree, right?
  - gruez 2y ago
    "*opolies" =/= price fixing/collusion, which is what the FBI is investigating them for. Even if you don't have a monopoly but you agree to fix prices with a competitor, it's still illegal.

dpflan 2y ago

""" Well, there’s a civil antitrust action in Tennessee that’s been going on since 2023, where the argument is that RealPage has been working with at least 21 large landlords and institutional investors, encompassing 70% of multi-family apartment buildings and 16 million units nationwide, to systematically push up rents. And RealPage isn’t just some software company distorting rental markets, it’s also owned by Thoma Bravo, one of the biggest private equity firms in the U.S. """

mlazos 2y ago

the whole real page situation irks me to no end. As if being a landlord wasn’t easy enough just milking people they needed even more money by colluding? It’s just obnoxious and I hope it gets the book thrown at it (and its corporate officers, but that might be too much to ask)

SoftTalker 2y ago
Being a landlord isn't easy, but that's not an excuse to engage in collusion on pricing.
- ljsprague 2y ago
  Being my landlord is very easy.
- oldstrangers 2y ago
  It's exceptionally easy. That's why landlords are able to own hundreds to thousands of properties / units.
  - gruez 2y ago
    >That's why landlords are able to own hundreds to thousands of properties / units. Presumably they have dozens/hundreds of workers to manage those units? I'm not sure how "number of units owned" is indicative of easiness. A quantitative trading firm has billions of dollars under management. Does that mean it's even easier to be a quantitative trading firm?
    - deleted 2y ago
      [deleted]
    - oldstrangers 2y ago
      >Presumably they have dozens/hundreds of workers to manage those units? Correct... which makes being a landlord exceptionally easy. All you have to do is have enough money. There is no cognitive or physical load that a landlord is required to carry, you simply open your checkbook.

FlamingMoe 2y ago

I appreciate that this investigation/raid is being conducted without becoming a major political talking point. Refreshing to see the government simply doing its job.

aaomidi 2y ago
At this point I want yearly elections because it seems like election year is the only time the government does its job. Maybe even monthly elections!
- xenospn 2y ago
  We have elections every two years! Really more than enough.
  - JohnFen 2y ago
    Far more than enough. We're basically always in an election cycle, and always being subjected to all the electioneering BS that brings. It's utterly exhausting and infuriating.
  - anigbrowl 2y ago
    Imagine a job where you only undergo a performance review and the risk of not having your contract renewed once every two years. You have to be George Santos levels of untrustworthy to get ejected by your fellow legislators.
    - leereeves 2y ago
      As it should be. The legislators should be chosen by the people, not by other politicians. And I seriously doubt the people want to choose more than once every two years (many only vote once every four years).
      - anigbrowl 2y ago
        This rather misses the point that it's very easy for an incumbent to pass a biannual performance review unless they're massively corrupt or out of touch, which translates to giving politicians an undeserved level of job security.

gedy 2y ago

I'm curious why does RealPage get all the blame in media? I think every property management app does the same type of rent analytics.

Aloha 2y ago
https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r... Because of the coercion the company puts on its customers for bucking what their software says to do.
- gedy 2y ago
  Just seems like what the other PMA apps do too, e.g. Yardi, Buildium, Appfolio Not saying it's okay, just why do we only hear about Realpage
  - stackskipton 2y ago
    Other apps are not just price fixing but property management and reporting though I've seen Realpage type behavior from them. My guess is since Realpage is biggest and their business is all about price fixing, Feds figure convict them, shut them down and MAYBE send exec or two to jail and rest will fall in line so quickly.
infecto 2y ago
- RealPage has the majority of the market for big property owners. - RealPage makes the price increases opt-out with required justification.
bri3d 2y ago
There are several issues with RealPage versus something like a public-data analytics tool: * RealPage actively suggests a price for each unit without exposing the underlying fundamentals to the customer, rather than displaying aggregate data and allowing the customer to make a pricing decision. * RealPage incorporates private data, including vacancy data, from all participating companies into their pricing model in order to generate a shared agreement about pricing. This information is being voluntarily shared in order to manipulate the market - that is, they broker horizontal collusion between players in a vertical industry. A group of landlords calling each other to say "we're going to make sure the vacancy rate stays at 5.5% this year" or "hey let's make sure we don't let these units go for under market value even though they're empty" would also be illegal collusion, it's just being laundered through an algorithm. This is the big smoking gun that makes it a hub-and-spoke price fixing ring (also called vertically integrated horizontal collusion - ie, a cartel). There's also the part where RealPage bought their main large-scale competitor, Lease Rent Options (who claimed to use only public data, in contrast to RealPage), in a 2017 deal that probably shouldn't have passed antitrust review, so there isn't anyone else to blame (they also own Buildium).

r0m4n0 2y ago

I’m curious what RealPage gets out of all this. Based upon the alleged activities it sounds like price fixing to the layperson but why? Realpage should just be concerned with keeping their saas customers by making a good product. Coordinating this conspiracy sounds like a lot of work for little gain of a software company. As someone who has been the target of an overzealous law enforcement investigation, these investigators love to come up with a larger conspiracy to fit their narrative. It could just be too many properties are owned by a few people and they have too much pricing control over entire regional markets… too bad we don’t have a choice but to pay when you need somewhere to live. I suppose all we can do is speculate until the evidence is shown.

lotsofpulp 2y ago
>Coordinating this conspiracy sounds like a lot of work for little gain of a software company. Presumably, RealPage can sell its services for a far higher price with the conspiracy than without. It doesn’t take a genius to periodically poll competing landlord’s rental prices, either via telephone or internet search. What does take a genius is to deliver the benefits of being a cartel and also deliver plausible deniability to avoid legal/punitive costs.
quasse 2y ago
> Realpage should just be concerned with keeping their saas customers by making a good product The coordination is the service. Realpage is literally offering CaaS (cartel as a service). The "market insight" would be nearly valueless without the guarantee that Realpage was signing contacts with your competitors that prevents them from undercutting your prices (and vice versa).
pixl97 2y ago
> Realpage should just be concerned with keeping their saas customers by making a good product. That's not how late stage capitalism works. Quite often it's closer to winner take all. Think about it this way, you need to buy a piece of management software that costs $1000 per month (or $10,000 whatever, just a healthy chunk of your revenue). They both do the job well enough so they aren't completing on capability. Now imagine one of them earns you 25% more by using it. Well, everyone that rents is going to be interested in that sales pitch. Capitalists like more money for the same expenses.

jupp0r 2y ago

"Landlords adopt RealPage recommendations on pricing 80-90% of the time, which explicitly drives up revenue by holding apartments off the market. " Can somebody explain how holding apartments off the market is driving up revenues?

lotsofpulp 2y ago
If enough sellers band together and set a minimum price level for a good with low elasticity of demand (meaning people need it no matter what and will sacrifice other parts of their budget to obtain it, like shelter), then the higher prices could lead to higher revenue even though fewer units are sold (due to higher per unit prices).
- r00fus 2y ago
  Yes, this is what Cartels do - and that behavior is generally illegal - but requires a government that cracks down on this. In China this level of crime gets you sent to re-education camps or just executed.
sokoloff 2y ago
If I have 100 units and set the price such that no unit is ever vacant, that price is surely lower than if I set the price such that 90 or 95 of them are occupied at any given time. If the rent to leave 10% vacant is 11% higher, I basically break-even on cash-flow and have a higher building valuation (on a multiple of rents when fully-rented basis). If it's 12% higher, I make more cashflow (plus giving myself an easier job with more freedom in operations to do medium maintenance between tenants and have units free for temporary dislocations, etc;).
- SoftTalker 2y ago
  Right, and it works best for large landlords that have hundreds or thousands of units. The small landlord/owner with a couple of houses or condo units is going to want them 100% rented because leaving even one of them vacant is going to be significant impact on revenue.

dudeinjapan 2y ago

Rent-seeking, pun intended.

SoftTalker 2y ago

Anyone here working on tech for RealPage? How do you justify it?

toyg 2y ago
Not one of them but I expect they will justify it in the same way as anyone else: bills, food, mortgage, kids, etc etc. Do not blame the exploited, blame the exploiter.
- hiatus 2y ago
  > Do not blame the exploited, blame the exploiter. I don't see how this can be accepted and yet "just following orders" is viewed negatively.
  - toyg 2y ago
    Godwinizing is the death of discussion. Cooperating in raising rent and cooperating in genocide are different things.

daft_pink 2y ago

I think when they take the step of requiring subscribers to let them set prices, they are clearly violating the law. I’m skeptical that analysis reports telling landlords to raise rent are illegal, but writing in the contract that you have to follow the rules of the association is obvious collusion/cartel behavior.

SoftTalker 2y ago
Yep, on one level it could just be automating the task of scanning Zillow and other sites and seeing what other landlords are asking. Any landlord is going to be doing that to some degree. But the price-fixing amongst "competing" landlords is where it goes wrong.
- phkahler 2y ago
  >> But the price-fixing amongst "competing" landlords is where it goes wrong. I would bet they're spreading the empty units around too, so no landlord ends up with all the empty ones.
  - gruez 2y ago
    Wouldn't that happen organically? The underlying principle of "you want to leave a certain % of your units empty to maximize profits" is microeconomics 101 and doesn't require any coordination between landlords. Without realpage there will probably be a "rule of thumb" to follow, which most landlords will use. They'll in turn set their prices to hit that number, thereby ensuring that the empty units are spread around evenly.
    - mjcl 2y ago
      Correct, and even YieldStar has a customer-set vacancy and lease expiration targets that it works towards. RealPage trains the customers to accept a little more vacancy to gain higher lease pricing.
      - 2y ago

settsu 2y ago

While this seems like a legal (and moral/ethical) win, I can't help assume there will be no meaningful justice for anyone directly affected by the conspiracy. At best there might eventually be a class action lawsuit filed on behalf of the victims, resulting in a meager payout. Meanwhile the perpetrators will reorganize and lobby their misdeeds into legality.

QuarterReptile 2y ago
Justice is an ongoing effort. Its effects span restitution, retribution, and deterrence. If no one in the system ever pursued justice without figuring out how it gets him paid for this transaction, this time, there would be no justice. And all the way down that sliding scale of justice, where the global minimum is basically Haiti, you have increasingly heavy-handed chances to stop the bleeding (e.g. El Salvador.) For more concrete specifics, reorgs and lobbying are both costs, so you can rest content that this effort imposes costs.

mlhpdx 2y ago

Wow. Maybe some folks will consider having their money managers blacklist Thomas Bravo. If this egregious behavior is in the portfolio it may be an outlier, but probably isn't.

dylan604 2y ago
Yeah, I seriously doubt the majority financeBros will give 2 shits about the ethics of this company. The only thing they care about is the bottom lines look good on paper. Sure, there maybe funds out there that have some sort of ethics/morals about their investments, but I'm guessing they are very much in the minority
- mlhpdx 2y ago
  I’m talking about the people the “finance bros” are chasing; the high net worth folks that hire them. They are the ones to compel significant change.

jl2718 2y ago

The fundamental problem here is investment cash flows eclipsing operational cash flows. This invalidates basic economics of supply and demand price equilibrium. In this case, it means that the landlords can restrict supply without losses.

gruez 2y ago
1. Opportunity cost is a thing. Even if a vacant unit doesn't cost you anything, you're still leaving money on the table by not renting it out. 2. the propublica article claims that realpage increases overall revenue by renting out less units.
- supplied_demand 2y ago
  ==Even if a vacant unit doesn't cost you anything, you're still leaving money on the table by not renting it out.== From an economics standpoint, if you rent out 10+ units, having them 100% rented would also indicate that you are leaving money on the table. Maybe there could be a fine/tax for units vacant over 6 consecutive months?

bcarroll22 2y ago

genuine question here, apologies if i missed it in the article, but what's RealPage's crime in this? how is using an algorithm to set prices on apartments more criminal than using an algorithm for anything else we use algorithms for? i'm not saying it's not criminal, i just don't think i understand what american laws they're breaking by doing this.

stackskipton 2y ago
They get data from all the subscribers, including non-public data like vacancy/rent agreement length/units being taken off the market for various reasons than use that data to determine prices for the subscribers. DoJ is investigating this as Price Fixing which is criminally illegal in United States.
- bcarroll22 2y ago
  got it, thanks. so based on this context and some other comments, it seems like the potential crime isn't so much that they use these sources to algorithmically suggest a price or contrived vacancy, it's that their agreement enforces that any of their subscribers has to use their suggestions on price and availability, thus making it likely price fixing. correct?
  - notaustinpowers 2y ago
    There's a few different aspects: They're using non-publicly data provided by their friends/partners to set rental rates. This data includes lease length terms, de-marketing reasons, etc. They then use this data to set a price on a specific unit. If I used their software and was putting a unit up on the market, they would have the price they recommend. If I disagreed with that price, I wouldn't be able to change it. I had to submit an appeal to RealPage, they would review my appeal, and decide if the rental rate was correct or not. I, as the property owner/management company, have lost all ability to set rental rates myself to the complex I own or work for. And due to their pricing being compared to their own units, or to their partners units, this amounts to price fixing.
  - 2y ago

mistersquid 2y ago

The startup I worked for, MyNewPlace based in San Francisco, was acquired by RealPage in 2011. The execs were from Texas and when they presented to the MyNewPlace team, they told us SFers with smug self-satisfaction that drug testing would be required as a condition of employment. I was not and am not a heavy drug user; I am anti-surveillance state. I helped a bunch of fellow devs (including myself) apply for medical marijuana prescriptions (cannabis was not recreationally legal in CA at the time) and when proffered the RealPage offer of employment, I resigned on the spot. This is my look of smug self-satisfaction that the RealPage execs are now under Federal scrutiny for monopoly price-fixing.

dylan604 2y ago
I worked for a video/audio/graphics production company that was purchased by a corporate entity. The new corporate daddy has a drug-free policy, and wanted to implement that with the newly purchased employees. I joked and said that anyone that passes that test in this type of industry should be fired. Like, you're just not trying to very hard to be creative if cannabis isn't part of the process. Ultimately, the tests were never administered after tremendous push back. The policy was not revised, but just not bothered with. The funny thing, is this was in a state that I swear will be the absolute last state to allow for any kind of legalized use.
kstrauser 2y ago
Bravo! I'm in the same boat: I don't partake, but neither do I want my boss watching me on my day off. Two related stories: 1. A friend went through the same process as you. The whole Bay Area team refused to take the tests. New corporate boss: "But we test everyone!" Local team: "Not here, you don't!" Faced with a choice between firing the entire new acquisition or getting some sanity, the buyer modified their supposedly inviolable policy to exempt CA employees. 2. I was the CISO at a prior gig when an enterprise customer was evaluating our service. They checked all the usual boxes and then asked, "oh, and you do drug test all your employees, right?" The CTO and I looked at each other and I had the privilege of being the one to say, no, we do not and will not test our employees. Either they're performing up to expectations or they're not. That felt great. I had a beer yesterday and I know I won't be in trouble for that. Why should I remotely care whether a coworker smoked a joint at the same time? We're both sober and working today. Edit: CTO and I laughed about it later. What counts as a passing score locally? Is there a minimum value, too, or just a max?

emmelaich 2y ago

In an ideal world, supply would rise because landlords would want to make more money in total. So the question is why isn't supply rising? Is it because existing landlords aren't funding housing construction or the difficulty of entering the market? Surely it cannot be that the supply of land is that limited. Or is it? Due to zoning regulations?

stass 2y ago
Land in desirable areas is limited and zoning and other government red-tape prevents high-density housing from being built (or any housing being built period in cases like San Francisco).
violet13 2y ago
New construction is rapidly getting more expensive in many of the markets where it's needed the most. While it'd be cool to point to a single factor, it's a combination of several things. People are expecting more (more square footage, higher-end finish), the government is demanding more (environmental and energy regulations), labor is getting costlier, and yes - there's NIMBYism manifesting through zoning laws and other "conservation" rules.
- llamaimperative 2y ago
  In high cost-of-living areas it's the land price.
  - violet13 2y ago
    Not entirely, but either way, land value is tied to all of that. If the city can't grow due to zoning and conservation rules, and if you can't subdivide existing parcels, you basically have more and more money chasing the same lots. By "not entirely", I mean that while land value often dominates, lowering it doesn't solve the problem, because even if you somehow acquired a city lot for $50k in the Bay Area, you wouldn't be able to build a house on that lot for $100k. So, solving one problem doesn't make it affordable.
2y ago

neilv 2y ago

> Landlords adopt RealPage recommendations on pricing 80-90% of the time, which explicitly drives up revenue by holding apartments off the market. As the architect of RealPage once explained, “[i]f you have idiots undervaluing, it costs the whole system.” It’s not just an information-sharing and price recommendation engine. RealPage has ‘pricing advisors’ that monitor landlords and encourage them to accept suggested pricing, it works to get employees at landlord companies fired who try to move rents lower, and it even threatens to drop clients who don’t accept its high price recommendations. This one’s a very clear conspiracy. Allegedly. This raid is potentially glorious. Faith in the system tentatively renewed. I'll keep my fingers crossed for not only certain parties going to prison, but also certain parties being forced to compensate for the huge harm to entire markets and the people in them that they knowingly caused. (IIUC, if a lot of owners collude to manipulate prices, then the rest will also tend go up, because they notice the new "market" price, and they see their costs are going up. And then this has other economic effects, including payroll and retention for small businesses. And presumably also the various costs to society of health and happiness problems, since the economic stresses can be pretty bad for some.)

toyg 2y ago
I doubt much punishment will actually happen, beyond some nominal reparations; but it could establish a legacy in the field of SaaS antitrust, which could cool down some of the worst animal instincts in the market.

rconti 2y ago

> And rent in that city has exploded, up 80% since 2016. What’s odd about this price increase is that vacancy rates have been inching up, and when there’s more supply, prices should come down. But they aren’t. I'd be curious to see the vacancy rate data.

notaustinpowers 2y ago
I live in Atlanta so I'm familiar with vacancy rates here. This data from Costar shows it's the highest in the nation and has gone up around 60% around 7.5% to 12% since Q1 2021. https://www.costar.com/article/961023632/atlanta-multifamily-vacancy-rate-doubles-in-two-years-now-highest-among-large-us-markets https://www.costar.com/article/961023632/atlanta-multifamily...
- rconti 2y ago
  Wow. That sounds like a LOT more than "inching up". I got the feeling from the article it must be significant, but their use of the term "inching up" made me think maybe it was somehow not all that great.

dzonga 2y ago

I remember in college, one of the classes you're required to take for CS is Ethics For Engineers. I wonder if VC's or people with Finance background are required to take Ethics classes.

EVa5I7bHFq9mnYK 2y ago
I worked at a bank, in equities. There were Ethics and similar online courses every week, with exams. We just shared exam answers in our group chat. With that, blindly clicking through the course and clicking the right answers was ~10 minutes.
stemlord 2y ago
I feel it's not that they don't know how to be ethical so much as it is they don't care
- cyanydeez 2y ago
  Yeah, seems like there's a majority at the top of the ladder who want to pretend all this stuff is naive meanderings of capitalism and not a concerted effort to pull up the latter of prosocialism that worked for many decades until black people got equal rights.
gowld 2y ago
Nearly all of Finance theory is Ethics, but with the vector pointing in the opposite direction.

muro 2y ago

I wish they would look into wage fixing across companies too - where at least "big tech" shares / buys salary data across all their competitors, so they don't have to increase wages - they fix them by being consistent across that dataset. Seems to be the same thing, just in a different "market"

gruez 2y ago
>I wish they would look into wage fixing across companies too - where at least "big tech" shares / buys salary data across all their competitors, so they don't have to increase wages - they fix them by being consistent across that dataset. If this is "wage fixing" by the employer, what does this say about sites like levels.fyi for employees? Is that also "wage fixing"?
- flerchin 2y ago
  Public data sharing is allowed.
Aloisius 2y ago
The DOJ had safe harbor guidelines for the sharing of price and wage surveys through a third-party intermediary as long as it was sufficiently old and aggregated to prevent determining the prices/wages of a specific competitor. Those guidelines were rescinded by the Biden administration last year due to concerns that algorithms eroded the distinctions between past/aggregated and current/disaggregated data.

wellthisisgreat 2y ago

Take them apart. Housing should not be a way to make investments at scale. Not while there is a housing crisis One thing is owning your house and wanting it’s value to appreciate, another is cornering people to bleed them dry leveraging the fear of homelessness

Nasrudith 2y ago
But making investment at scale is how you get more of something!

ElijahLynn 2y ago

Rent Control Creates Communities No Rent Control Destroys Communities

spacephysics 2y ago
Very black and white take, no rent control also implies no monopolies/price fixing behavior which is illegal and the point of this post. “Rent Control” is just price fixing in favor of the consumer, but has also a litany of issues including the quality of the community formed Example if rent control forces prices down, but inflation makes the cost of maintenance high, then cost cutting will be done (poor service, poor landscaping, outdated appliances, less renovations, less security). Saying to just do rent control is just as bad as saying let free market run wild regardless of price fixing/collusion

msie 2y ago

Heh, on Twitter, I was arguing against someone who thought that a corporation buying up apts and renting them out would result in lower rents. C'mon really?

Apreche 2y ago

Is there a source for this story?

zackmorris 2y ago

I first heard about the RealPage price fixing conspiracy on TikTok. It wasn't this video, but very similar (he swears at the 1:35 mark so use headphones if needed): https://www.tiktok.com/@newsforthought/video/7159031342439796014 https://www.tiktok.com/@newsforthought/video/715903134243979... What's going on is that Vanguard, BlackRock and (other?) private equity firms have bought up huge swaths of real estate in the US as secure investments. This started around 20 years ago when financial advisers like Suze Orman recommended Vanguard as a vehicle for retirement savings alongside a 401k, Roth IRA, etc: https://www.suzeorman.com/resources/mutual-funds https://www.suzeorman.com/resources/mutual-funds https://www.oprah.com/money/financial-freedom-by-suze-orman https://www.oprah.com/money/financial-freedom-by-suze-orman (2008) Now during a slow housing market, private equity firms are holding land and housing, rather than selling for a loss like banks did when the 2008 housing bubble popped. Due to a weak economy post-pandemic, inflation driven by corporate greed to prevent losses by the wealthy during those ~2 years that labor stayed home from the workplace, and high interest rates which resulted from the Federal Reserve trying to slow that inflation. Their infinite holds have resulted in record high rents and mortgages due to low volatility from lack of competition. Depending on how the presidential election goes, and if there's a recession or stagflation in the following year(s), private equity firms will likely find themselves under increasingly high pressure to sell and free up capital to pay their investors dividends. Then private equity firms may go to the federal government for a bailout just like Fannie Mae and Freddie Mac did. Basically Gen X, Millennials and Gen Z on Main Street will be asked to bail out private equity firms on Wall Street to save the retirements of Boomers. The key difference between the Housing Bubble popping and today being that people under 50 have been under the yoke this whole millennium: underemployed, working excessive hours and multiple jobs while being denied raises/savings/retirements and even having their social safety net slowly dismantled (for example the unemployment work search requirement used to deny benefits after the mid-2000s) since the economy became financialized after the 2000 Dot Bomb. At every turn, rather than investing in stuff like automation and renewable energy, prioritizing work/life balance like in Scandinavian countries, or even promoting unions/guilds/cooperatives, the US outsourced 100,000 factories under the GW Bush Administration and stonewalled nearly all pro-labor programs under the Obama Administration. Leaving us with a monopolized and duopolized economy that nickel and dimes working people and blocks them from participating in capital investment by labeling low-dollar trades as "pattern day trading" in 2001, for example: https://en.wikipedia.org/wiki/Pattern_day_trader https://en.wikipedia.org/wiki/Pattern_day_trader After a lifetime of exploitation, it's a bit like the Lannisters having to go to the Iron Bank when their gold mines stopped producing. Or billionaires who can't find where all of the money went, begging young people for their last penny so their grandparents can retire in dignity. It.. raises some eyebrows to say the least. RealPage may be the first in a long chain of dominoes that leads to young people having real leverage over moneyed interests. It will be curious to see how they respond - whether they bow to the status quo or organize to demand structural changes in the economy like during the Progressive Era, New Deal and post-WWII economic expansion before trickle-down Reaganomics flatlined wages as productivity increased after 1980.

thrownaway561 2y ago

wake me when someone actually get indicted. i highly doubt anything comes of this especially when the article mentions that realpage has lobbying going on.

antisthenes 2y ago

Hopefully the health insurance industry is next. They siphon way more money out of the general populace than COVID rent increases.

jauntywundrkind 2y ago

It's weird thinking of FBI raids like this. Like, what's even in the office that matters? All the data, all the systems will be in AWS or some other cloud. No one's gonna be slowed down for a second by not being at their desk. I can scarcely imagine what would be required to try to prevent this. Call up AWS and order them to block a bunch of ports, hope there's no jumpboxes or vpns on odd ports? Run deep packet inspection and hope there aren't web terminals in use? Assuming you do get network access, assuming you're not afraid of employees messing around while you are raiding, it's still a nightmare. The office systems and the product are probably just so convoluted & interwoven in most companies.

tombayoumi 2y ago

Does anyone know how to figure out who their clients are or were?