7 ms·

Algorithmic price-fixing of rents is here

102 points by jtotheh 2y ago

jtotheh 2y ago
https://web.archive.org/web/20240810153028/https://www.theatlantic.com/ideas/archive/2024/08/ai-price-algorithms-realpage/679405/ https://web.archive.org/web/20240810153028/https://www.theat... Algorithms may be allowed to facilitate price-fixing among landlords in ways that would not be allowed if done by humans.
- programjames 2y ago
  I think the problem is worse than just algorithms. If something is around long enough, it'll naturally evolve an implicit coordination, as those who don't coordinate die out.
  - sfmz 2y ago
    Its not hard for a landlord to open zillow and see what the comps are going for... that's what I've been thinking the whole time that there is already enough market information to coordinate.
    - nemomarx 2y ago
      There must be some difference between zillow rents (open units) and the rents being paid by existing tenants or tenants who renew leases, right? You'd expect zillow prices to be a little higher at least, and it could have a huge distortion.
gnabgib 2y ago
Related FBI raids Atlanta corporate landlord in probe of rental market price fixing (252 points, 2 months ago, 266 comments) https://news.ycombinator.com/item?id=40580874 https://news.ycombinator.com/item?id=40580874
Gabriel54 2y ago
It is completely anecdotal but in my local experience I've seen the following pattern happen: rent is increased substantially, present tenants move out, no one new applies, unit becomes empty, rent is decreased until someone new finally moves in. I'm not a landlord but I don't think there is a rational basis for kicking all of your rent paying tenants out and then having half a dozen units go empty in the hope that you can squeeze an extra 100 every month out of someone, maybe, in the future.
- gruez 2y ago
  >rent is increased substantially >[...] in the hope that you can squeeze an extra 100 every month [...] Which one is it? Was the increase "substantial" or was it only 100 bucks? > I'm not a landlord but I don't think there is a rational basis for kicking all of your rent paying tenants out and then having half a dozen units go empty in the hope that you can squeeze an extra 100 every month out of someone, maybe, in the future. Hindsight is 20/20. My guess is that the landlord thought the market was going to bear the price increase, and went all-in on it rather than only doing it on a portion of his tenants.
  - suby 2y ago
    > Which one is it? Was the increase "substantial" or was it only 100 bucks? Not OP, but here is how I interpreted this. Increase rents substantially -> no one takes it -> decrease rents over time until it hits a rate the market can bare -> people move in when rents are 100 dollars above what the previous tenets were paying.
    - nox101 2y ago
      Anecdata of 1 but. In July 2021 got place for too much $$$. In July 2022 they said the rent was going up $400 a month. I moved out. In July 2023 they were asking $100 less than I was paying in July 2021 I have no idea if that was this software or market change or what. It was huge complex. 700-800 units. At the time I just guessed that they raise the rent for everyone when their lease is up because most people don't want to move and will put up with the rent increase even if they hate it. For me, the place had issues. If the rent had stayed the same I'd have put up with them just because it's easier to put off finding a new place, but $400 a month was enough for me to just move.
doytch 2y ago
In the article, one of the lawyers quoted states that "enforced compliance is the hallmark feature of any cartel." Is that part of the legal requirements for a guilty judgement or breaking up a cartel? In the US at least? Would RealPage be fine if they treat their recommended prices as mere suggestions?
- jimbob45 2y ago
  eBay does the same thing but only as suggestions. I feel like it would be very different if they weren’t just suggestions.
  - tylerhou 2y ago
    There is also a difference between suggesting a price to an uninformed, individual participant vs. highly informed participants that control large segments of the market.
zjp 2y ago
We're really gonna exhaust every option we have before we build new housing.
emseetech 2y ago
These algorithms have an economic incentive to suggest higher rents, because that's what the customer (landlords) want to hear. If the algorithm calculates a rent 30% lower than the previous tenant was paying, landlords will either ignore the recommendation or shop around for another startup with an algorithm that tells them what they want to hear.
- doctorpangloss 2y ago
  Another POV is that if people want rent control, go for it. Repeal Costa Hawkins. Take leadership.
d_sem 2y ago
What is happening in the Bay Area is large corporations are using 3rd party exchanges that make following the price guidelines a requirement to participate. The 3rd party is paid to set the regional prices. And they all win through fee's and higher rent prices. Its old fashion collusion. Using the word algorithm obfuscates the simplicity in the criminal activity.
Animats 2y ago
We need a massive effort to enforce the Sherman Act against landlords. Both breakups and criminal penalties need to be applied. Send some big landlords to prison for 10 years and this problem will stop.[1] [1] https://www.nytimes.com/2024/07/19/business/economy/rent-prices-realpage-lawsuit.html https://www.nytimes.com/2024/07/19/business/economy/rent-pri...
- chairmansteve 2y ago
  Exactly. They are operating a cartel.
- deleted 2y ago
  [deleted]
globalnode 2y ago
there needs to be adequate public housing for people that can't afford this bs. then landlords can do what they want, let the market decide, but basic housing for people should be a priority.
AbstractH24 2y ago
Haven’t we been this for a few years now. Is it news anymore?
pipes 2y ago
I own a rental property. This is how it works for me: Tenants move out. I look at how much similar property is renting for in the area. I advertise at about that rent. Usually a bit lower. Prospective tenants agree to to rent at that price. I don't control prices. That is supply and demand. Software that looks at rents in area and suggests a price just sounds like automation of what I do manually.
- mint2 2y ago
  But what real page is doing is not what you described. If you looked at the rents, put yours at slightly higher than average and then strong armed the owners of the majority of similar units to do the same even if your vacancy rate goes up so that now yours is right at the new average, then it would be similar to real page.
  - pipes 2y ago
    But how do real page strong arm land lords into charging higher rents? (Genuine question, I don't see how that can be possible)
    - mint2 2y ago
      If they don’t, real page threatens to give them the boot apparently. Also it seems they make it a require multiple manager overrides to deviate.
      - pipes 2y ago
        That bit I missed!
    - ausbah 2y ago
      if you read the article there are allegations those who go under market value are forced off the site for bringing the recommended price down
brian-bk 2y ago
Same thing happens in reverse with salaries. Glassdoor isn't your friend, it just helps companies regress to the 50th-percentile.

102 points by jtotheh 2y ago

https://web.archive.org/web/20240810153028/https://www.theatlantic.com/ideas/archive/2024/08/ai-price-algorithms-realpage/679405/ https://web.archive.org/web/20240810153028/https://www.theat... Algorithms may be allowed to facilitate price-fixing among landlords in ways that would not be allowed if done by humans.

programjames 2y ago
I think the problem is worse than just algorithms. If something is around long enough, it'll naturally evolve an implicit coordination, as those who don't coordinate die out.
- sfmz 2y ago
  Its not hard for a landlord to open zillow and see what the comps are going for... that's what I've been thinking the whole time that there is already enough market information to coordinate.
  - nemomarx 2y ago
    There must be some difference between zillow rents (open units) and the rents being paid by existing tenants or tenants who renew leases, right? You'd expect zillow prices to be a little higher at least, and it could have a huge distortion.

gnabgib 2y ago

Related FBI raids Atlanta corporate landlord in probe of rental market price fixing (252 points, 2 months ago, 266 comments) https://news.ycombinator.com/item?id=40580874 https://news.ycombinator.com/item?id=40580874

Gabriel54 2y ago

It is completely anecdotal but in my local experience I've seen the following pattern happen: rent is increased substantially, present tenants move out, no one new applies, unit becomes empty, rent is decreased until someone new finally moves in. I'm not a landlord but I don't think there is a rational basis for kicking all of your rent paying tenants out and then having half a dozen units go empty in the hope that you can squeeze an extra 100 every month out of someone, maybe, in the future.

gruez 2y ago
>rent is increased substantially >[...] in the hope that you can squeeze an extra 100 every month [...] Which one is it? Was the increase "substantial" or was it only 100 bucks? > I'm not a landlord but I don't think there is a rational basis for kicking all of your rent paying tenants out and then having half a dozen units go empty in the hope that you can squeeze an extra 100 every month out of someone, maybe, in the future. Hindsight is 20/20. My guess is that the landlord thought the market was going to bear the price increase, and went all-in on it rather than only doing it on a portion of his tenants.
- suby 2y ago
  > Which one is it? Was the increase "substantial" or was it only 100 bucks? Not OP, but here is how I interpreted this. Increase rents substantially -> no one takes it -> decrease rents over time until it hits a rate the market can bare -> people move in when rents are 100 dollars above what the previous tenets were paying.
  - nox101 2y ago
    Anecdata of 1 but. In July 2021 got place for too much $$$. In July 2022 they said the rent was going up $400 a month. I moved out. In July 2023 they were asking $100 less than I was paying in July 2021 I have no idea if that was this software or market change or what. It was huge complex. 700-800 units. At the time I just guessed that they raise the rent for everyone when their lease is up because most people don't want to move and will put up with the rent increase even if they hate it. For me, the place had issues. If the rent had stayed the same I'd have put up with them just because it's easier to put off finding a new place, but $400 a month was enough for me to just move.

doytch 2y ago

In the article, one of the lawyers quoted states that "enforced compliance is the hallmark feature of any cartel." Is that part of the legal requirements for a guilty judgement or breaking up a cartel? In the US at least? Would RealPage be fine if they treat their recommended prices as mere suggestions?

jimbob45 2y ago
eBay does the same thing but only as suggestions. I feel like it would be very different if they weren’t just suggestions.
- tylerhou 2y ago
  There is also a difference between suggesting a price to an uninformed, individual participant vs. highly informed participants that control large segments of the market.

zjp 2y ago

We're really gonna exhaust every option we have before we build new housing.

emseetech 2y ago

These algorithms have an economic incentive to suggest higher rents, because that's what the customer (landlords) want to hear. If the algorithm calculates a rent 30% lower than the previous tenant was paying, landlords will either ignore the recommendation or shop around for another startup with an algorithm that tells them what they want to hear.

doctorpangloss 2y ago
Another POV is that if people want rent control, go for it. Repeal Costa Hawkins. Take leadership.

d_sem 2y ago

What is happening in the Bay Area is large corporations are using 3rd party exchanges that make following the price guidelines a requirement to participate. The 3rd party is paid to set the regional prices. And they all win through fee's and higher rent prices. Its old fashion collusion. Using the word algorithm obfuscates the simplicity in the criminal activity.

Animats 2y ago

We need a massive effort to enforce the Sherman Act against landlords. Both breakups and criminal penalties need to be applied. Send some big landlords to prison for 10 years and this problem will stop.[1] [1] https://www.nytimes.com/2024/07/19/business/economy/rent-prices-realpage-lawsuit.html https://www.nytimes.com/2024/07/19/business/economy/rent-pri...

chairmansteve 2y ago
Exactly. They are operating a cartel.
deleted 2y ago
[deleted]

globalnode 2y ago

there needs to be adequate public housing for people that can't afford this bs. then landlords can do what they want, let the market decide, but basic housing for people should be a priority.

AbstractH24 2y ago

Haven’t we been this for a few years now. Is it news anymore?

pipes 2y ago

I own a rental property. This is how it works for me: Tenants move out. I look at how much similar property is renting for in the area. I advertise at about that rent. Usually a bit lower. Prospective tenants agree to to rent at that price. I don't control prices. That is supply and demand. Software that looks at rents in area and suggests a price just sounds like automation of what I do manually.

mint2 2y ago
But what real page is doing is not what you described. If you looked at the rents, put yours at slightly higher than average and then strong armed the owners of the majority of similar units to do the same even if your vacancy rate goes up so that now yours is right at the new average, then it would be similar to real page.
- pipes 2y ago
  But how do real page strong arm land lords into charging higher rents? (Genuine question, I don't see how that can be possible)
  - mint2 2y ago
    If they don’t, real page threatens to give them the boot apparently. Also it seems they make it a require multiple manager overrides to deviate.
    - pipes 2y ago
      That bit I missed!
  - ausbah 2y ago
    if you read the article there are allegations those who go under market value are forced off the site for bringing the recommended price down

brian-bk 2y ago

Same thing happens in reverse with salaries. Glassdoor isn't your friend, it just helps companies regress to the 50th-percentile.