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FBI raids Atlanta corporate landlord in probe of rental market price fixing
- aetherson 2y agoNo.
- jbruton 2y agoBetteridges Law in action. https://en.m.wikipedia.org/wiki/Betteridge%27s_law_of_headlines https://en.m.wikipedia.org/wiki/Betteridge%27s_law_of_headli...
- gruez 2y agoThey're probably responsible for a non-zero proportion of the price increase, but the bulk is driven by supply and demand.
- beaeglebeachedd 2y agoAnd the people have themselves to blame for voting for zoning, code, and construction regulation that price housing into oblivion. Right now renting is even cheaper than owning!
- mirzap 2y agoPeople who buy property want to protect it and increase its value, so they have every incentive to vote for and support zoning and construction regulations. This is similar to immigration. People who immigrated earlier are the most vocal supporters of stricter immigration rules for future immigrants because they are afraid that a fresh influx of immigrants will reduce their competitiveness.
- beaeglebeachedd 2y agoSuch regulation is rampant and as bad or worse in places like San Francisco and NYC where most are renters.
- lenkite 2y ago> People who immigrated earlier are the most vocal supporters of stricter immigration rules for future immigrants small correction. People who legally immigrated earlier are the most vocal supporters of stricter immigration rules for future illegal immigrants.
- mirzap 2y agoThe rules are meant to prevent or make it more difficult for people to immigrate legally. Every additional rule only complicates legal immigration. How did people immigrate in 1900? They simply showed up at the border and signed in, and that was it. It was simple and legal, and there was no illegal immigration. And those first immigrants started adding rule by rule to prevent other people from coming. With each new rule, it has become increasingly challenging for people to immigrate legally, leading them to find alternative ways.
- lenkite 2y agoObviously, we should talk about the period after 1875 when the Supreme Court declared regulation of immigration a federal responsibility. There is little point to talking about a time when the known population of the U.S. was less than 5 million. Lets talk about the 20-21rst century. Social Security Program was created in 1935. Medicaid was established in 1965. Non-citizens became eligible for social security in 1996. Why talk about ancient history when there was little to no burden in citizenship ?
- _DeadFred_ 2y agoSomething like 1/3 of immigrants to the USA in the first part of the 1900s ended up returning to their home countries. It was a much different landscape and situation back then.
- seanmcdirmid 2y agoimmigration rules only apply to legal immigrants. So stricter immigration rules is more of a "screw you got mine" kind of thing, illegal immigrants would only be affected by border enforcement and job availability once they got in (which is crazily easy in the USA vs. a country like Canada).
- Ferret7446 2y ago> People who buy property want to protect it and increase its value They do this because they need investments, and all other forms of investment are less appealing due to regulation/risk. They need investments due to the misguided economic cargo culting that inflation is necessary, to promote investment. So the people invest. In property. You can see this magnified in China where traditional types of investments are unavailable, so the property bubble is constantly growing as it is constantly bursting. People follow the incentives, and not just the incentives set by the government, but the incentives of reality. If you drop a boulder, the river doesn't just stop; the river flows around it.
- m463 2y agoIf supply < $n/month is zero, what can you do? doesn't it just anchor prices at $n?
- aetherson 2y agoA perfect cartel does indeed increase prices to the level of the cartel's minimum. But the greater the price difference is between the natural price and the cartel minimum price, the greater the incentive is to break the cartel.
- rjejs 2y agoWell if at least not to blame then being used as laundering for price fixing
- pm90 2y agoThe company is RealPage and they are an online tool for setting rents.
- DANmode 2y agoand for general property management tasks.
- ryan_lane 2y ago"...an online tool for fixing rent prices across the market." Fixed that for you.
- barryrandall 2y agoNow they're just a clearinghouse for evidence of price fixing.
- davidw 2y agoBoth things can be true: * If this software system managed to add, say, 1% to hundreds or thousands of people's rents... that's a lot of money and the company probably deserves what's coming to them, civil or criminal. * Housing prices are still set by supply and demand. You can't charge LA prices in Atlanta no matter what kind of fancy scheme you run. People want a bogeyman so bad for the housing crisis, but it's mostly stuff like this, where local NIMBYs stop homes from being built: https://bendyimby.com/2024/04/16/the-hearing-and-the-housing-shortage/ https://bendyimby.com/2024/04/16/the-hearing-and-the-housing... That doesn't mean this company isn't gouging people a bit too, though.
- ben_jones 2y ago> Housing prices are still set by supply and demand. You can't charge LA prices in Atlanta no matter what kind of fancy scheme you run. And yet the market can remain irrational longer then you can remain liquid. We do not live in a fair market.
- davidw 2y agoWhat's unfair about the market is that it's mostly local "I've got mine" people shutting out the people who teach their kids, attend to them at the hospital, police their streets and so on, via things like zoning laws. It feels good to blame some big, far-off company but it's not where the bulk of the problem lies. That doesn't mean the company isn't gouging a bit though and if they are, fine, nail them.
- JumpCrisscross 2y ago> Housing prices are still set by supply and demand If the government's allegations are true, in markets where RealPage landlords control most of the rental supply, prices are not set by supply demand due to market failure. Given how expensive many cities make being a landlord, it makes sense there will be some where commercial landlords control most of the rental supply.
- davidw 2y ago
- sho 2y agoThis is happening in Australia as well. I am looking forward to a legal decision that SAAS-mediated collusion is still collusion.
- DANmode 2y agoThey could possibly knock off DAOs along with such a decision, if worded correctly.
- fsargent 2y agoIf people are still renting the apartments, and the vacancy rates aren’t going up, (which in the United States, they’re not), then no, one company isn’t driving rents up. We’re just not building enough housing.
- adzm 2y agoThe article mentions Atlanta right at the beginning, saying vacancies are rising. > RealPage's effects can be seen most noticeably in Atlanta, where software-based pricing affects more than 80% of rentals. Since 2016, rents in the city have grown by 80% — and higher vacancy rates have not driven prices down.
- beaeglebeachedd 2y agoHigher vacancies increase the utility of housing by reducing noise and crowding (quite a valuable quality for some), which counterintuitively may push back some against drops.
- davidw 2y agoMeanwhile, in places building enough apartments, rents are dropping: https://www.redfin.com/news/redfin-rental-report-april-2024/ https://www.redfin.com/news/redfin-rental-report-april-2024/
- gnicholas 2y agoIt's possible that rents would be dropping more if this platform were not used by landlords. That isn't to say it should be illegal or is unethical, just to say that the fact that rents are dropping doesn't mean this platform isn't having an effect everywhere it's used.
- davidw 2y agoI think it's entirely possible that it does have a small effect. A percentage point or two. And a percentage point or two across thousands of people renting adds up to real money they are helping to skim. I don't see any downside to going after them. That said, no, one company is not to blame for soaring rental prices across the US. It's mostly supply and demand.
- CivBase 2y agoSounds like RealPage makes it easy for landlords to identify market prices so they can charge as much as the market will bear. That's arguably scummy, but I don't see any evidence that RealPage is somehow affecting the market price itself. The market price is as high as it is because we have a housing shortage. RealPage just helps landlords take advantage of an underserved market.
- manwe150 2y agoIf anything, shouldn’t that drive prices down, as landlords now know exactly how much to undercut their competitors to still make a profit but also get more rapid turnover? I thought microeconomic competitive market theory assumes that more information is always a positive influence on markets, at least for the simplified models. Is RealPage a counter example?
- SoftTalker 2y agoThe agreement between RealPage and the landlord is that they do not undercut RealPage's recommended rent amount.
- Arainach 2y agoTo use RealPage you have to agree to not sell below their algorithmic price.
- telepathy 2y agoSo why is there a housing shortage?
- davidw 2y agoNIMBYs, mostly.
- jaakl 2y agoIt is not a real supply shortage: number of families has not gone up and number of homes has not decreased. It is just increase of demand side, probably due to the printed new money and income increase. People could just live as before but their appetite has grown and it pushes demand up.
- jmyeet 2y agoSeveral things can be true at once. The big problem is we've financialized housing, a basic human necessity. This is wealth extraction and, really, state violence. People buy into this model because they think they're building wealth. For the vast majority of people they own only their own home so they're not really growing wealth at all. After all, they can't just sell their house. They have to live somewhere. And no, this isn't a supply issue. We have enough housing. Second, landlords can form an effective cartel by all using the same tool that spits out the same numbers to all of them. If a company bought up 80-90% of the housing supply and jacked up the prices we'd all recognize the anticompetitive behavior. There's simply one level of indirection here. It's naive to think that cartel-like behavior is an unintended consequence. But taking out this one player won't fix the underlying problem.
- maximilianroos 2y agoIf landlords were restricting supply in order to increase rents, we'd see higher vacancy rates in locations with higher rents. But we see the opposite — NYC has a vacancy rate of 1.4% and peak rental pricing.
- seanmcdirmid 2y agoCollusion can raise rents instead. If all the landlords were conspiring to set a floor on rents that would maximize rents and rent utilization, for example, which would be illegal.
- Hnrobert42 2y agoNo. People have to live somewhere. It’s inelastic demand.
- seanmcdirmid 2y agoPeople don't have to live in the same place. We are seeing this in California now, which is losing population for the first time in 100 years because rent is too expensive for many people.
- BMc2020 2y agoWe would like to share with you our concern over recent structural developments that the Blackstone Group L.P. (Blackstone) helped to instigate whereby unprecedented amounts of global capital are being invested in housing as security for financial instruments and traded on global markets, which is having devastating consequences for people. As one of the largest real estate private equity firms in the world, with $136 billion of assets undermanagement... That was in 2019 when this report was written. It's now over a trillion. In neighbourhoods heavily invested by private equity firms including Invitation Homes, more than 7,400 families and individuals are evicted every day. In Charlotte, North Carolina, for example, it was found that in 2013 Invitation Homes filed eviction proceedings against 10 percent of its renters. Invitation Homes is part of Blackstone. Blackstone is by no means the only financial actor adopting the business model mentioned above. However, because Blackstone is a leader in implementing the new residential real estate business model and one of the largest global actors in residential real estate... https://www.ohchr.org/sites/default/files/Documents/Issues/Housing/Financialization/OL_OTH_17_2019.pdf https://www.ohchr.org/sites/default/files/Documents/Issues/H...
- gowld 2y agoTotal value of US residential real estate: $47.5 trillion Blackstone AUM: $1T (2% of market) Evictions per year: 7400 * 365 = 2.7M Homes owned by Invitiation: 2.7M / 0.1 = 27M % US Population in Invitation: 27M (x avg househould size) /400M > 5%. But Invitation is only a fraction of Blackstone. Something doesn't add up.
- LeafItAlone 2y agoWhat are you trying to calculate? Whatever it is, you’re mixing geographic regions and using aggregate numbers for all companies as if they were all as one.
- ChrisArchitect 2y ago[dupe] Discussion: https://news.ycombinator.com/item?id=40562834 https://news.ycombinator.com/item?id=40562834
- FesterCluck 2y agoHere's how this works: Illegal collusion and price fixing happens when owners of competing companies communicate to set prices. Apartments prices were historically a highly volatile compared to their lease lengths. One would have to own a majority of the apartments in a market to gain the data necessary to know things like upcoming tenant renewals, apartment renter influx/outflow, etc to combat things like mass-tenant exodus to a nearby apartment complex offering $100 less rent per month. This industry has been historically very competitive. Realpage does the colluding for them inside a database and whispers back "here's our number". How are non-participating properties punished? Debt Servicing. Try getting business loans for these properties without running Realpage's tools. Look at the investors and board members of RealPage, InvesTran, etc. and those in the property management companies. They are a very small circle hiding normally illegal activity behind algorithms. Encrypting or obfuscating illegal communications doesn't suddenly make them legal. Neither does charging money for the privilege.
- conductr 2y agoWhile this makes sense, I also see how RealPage likely got caught up and thought this was business insights they were selling as a data aggregator. (Being devil's advocate, I don't know much about their knowledge or ignorance.) Something that is all to common of a business practice these days. If the "here's our number" was whispered back as a "score" instead of a price and the cost was denominated in interest rates instead of dollars, wouldn't it be similar to the credit scores we all have? Is that a form of collusion as you define it?
- pjc50 2y agoThis is a very reasonable question which should not be downvoted. There was a huge scandal about interest rate collusion: https://en.wikipedia.org/wiki/Libor_scandal https://en.wikipedia.org/wiki/Libor_scandal I think it's under-studied how information and markets interact. There was the great "markets are efficient if and only if P=NP" paper. Basically the insight was that prices are information and a market is (supposed to be) a computing mechanism for finding "optimal" transactions. Price discovery is often difficult. It is natural for participants to outsource it to computers. But if all those computer services are run by the same company .. suddenly you have a single agent setting prices, not a market.
- kderbyma 2y agoMost of Canada is being actively price fixed by a handful of large real state companies that have purchased huge patches of housing and tend to do the minimum to maintain or improve and act more like litigious predators who price fix and remove all ownership from the experience
- ysofunny 2y agoyou've unwittingly described the real source of the fabulous status of the british royal family
- tomrod 2y agoIndeed, the very notion of feudalism and royalty is based on land barons.
- kibwen 2y agoThat "lord" in "landlord" ain't there for no reason. Are people finally prepared to understand that landlords are just the modern incarnation of parasitic aristocracy?
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- mrangle 2y agoOne might think. But common and even corporate landlords are not that powerful. See the fact that the FBI is raiding them for price fixing. Which they should, as rent prices are a major political instability pressure point and a major factor in the unspoken social contract. Private landlords exploiting tech to destabilize housing needs to be checked without quarter. Federal Police virtually never raid actual aristocrats in such a public manner, and especially not with a focus in their livelihood. Remember that the aristocracy was traditionally a powerful position: collectively challenging the King and often winning. The aristocracy actually morphed into parliamentary government, which is the dominant government throughout the West. That's where you find the legacy that you thought resided with modern landlords. While some might still earn a living in that manner: making and wielding the law long ago became more attractive.
- zxxh 2y agoI’m actually a landlord and my management company literally just has a list of all the rents being paid in my condo complex. Once I saw that I basically gave on my job as a SWE. We are just working for our landlords, you can’t win.
- neilv 2y agoDo you know how they got that list? (Do they just manage the property and collect condo fees, or do they also collect rents?)
- alchemist1e9 2y agoIn markets it helps greatly to have prices published publicly. Perhaps private rental transactions in apartment buildings should be required to be posted publicly?
- nothercastle 2y agoIf you monitor the public for rent posts you could mine that data over time. Most units turn over every couple years it wouldn’t take long to get a complete picture. You just wouldn’t know the incremental adjustment though you might be able to buy that from a broker
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- zxxh 2y ago[flagged]
- tootie 2y agoThis sounds less dramatic than the headline. They executed a search warrant for some information. Doesn't sound like they're close to charging anything.
- evantbyrne 2y agoFBI raids are dramatic. They show up unannounced and the warrants are worded broadly enough that they can basically take everything that could predictably contain evidence.
- objektif 2y agoAgain people seem to not be exposed to wtf is going on in the rental market. In my building I have seen prices of the same unit move by 10% within a few days. According to my management this is due to the “software” they are using.
- ChrisArchitect 2y ago[dupe] Discussion: https://news.ycombinator.com/item?id=40562834 https://news.ycombinator.com/item?id=40562834
- api 2y agoAll these schemes can only really be effective if housing supply is insufficient to meet demand. If there is plenty of supply it’s very hard to price fix a market. The cartels and PE investors are investing in NIMBYism. It’s a bet that resistance to construction will continue to keep supply artificially constrained, forcing prices up. If that resistance is removed these investments will underperform.
- nsoldiac 2y agoI think the cartel protects itself from an abundance of supply, that's part of the problem. If supply is high it should naturally translate to landlords cutting prices to compete. Instead, a cartel can coordinate to keep prices high or withhold listings to artificially constraint supply. That should keep rents high even during an abundance of supply. I read somewhere they're accused of doing exactly that.
- SoftTalker 2y agoYes but at some point the fixed costs of a vacant property are going to outweigh the extra income earned from higher rents on occupied properties. A vacant property still has to be insured, maintained, heated/cooled, taxes paid, mortgage or commercial loans paid. So if the supply is high enough that landlords can't afford to hold enough of them vacant to maintain high rents, they will eventually have to rent more of them.
- BurningFrog 2y agoEmpirically, a cartel of 2 can be quite stable With 3 or 4 members it gets harder, and with 5 or more someone will soon undercut the others. In secret or publicly. The landlord cartel theory requires landlords both to have unselfish solidarity with other landlords, and be selfishly greedy against renters.
- nottorp 2y agoApparently this application that we're talking about eliminates the inefficiencies in maintaining a cartel with a multitude of members.
- pabloarteel 2y agoI'd love to see the economy working on sound (non-inflatable) money, as I assume this would reduce people going in to real estate just to keep their money from losing value.
- Animats 2y agoAs the FBI should be doing. Sherman Antitrust Act: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor [. . . ] This is a classic Sherman Act violation - multiple companies explicitly colluding to raise prices.
- ineedaj0b 2y agothe collier company owns many college apartments and bought pretty much every single one around the university of Florida. I'm almost 90% certain they've raised prices higher and higher because they are the only game in town. I don't have the investigative chops to do a takedown, but if someone is reading this and wants a lead for a story, well here it is.
- nxobject 2y agoLina Khan seems to have had a lot of preliminary simmering in the background when we weren’t looking - the FTC is on a roll revealing its investigations, and perhaps just in the nick of time.
- kristofferR 2y agoGreat 8 minute documentary that explains the issue with RealPage and features interview with several of the suing State Attorney Generals: https://www.youtube.com/watch?v=cwlwrZst7d0 https://www.youtube.com/watch?v=cwlwrZst7d0
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