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I am very curious how this will play out. On one hand, I have seen it first hand here in Orlando that EVERY apartment complex uses the same software, all of th

I am very curious how this will play out. On one hand, I have seen it first hand here in Orlando that EVERY apartment complex uses the same software, all of them. At the same time, rent has gone up 300% in 10 years, or around 10% per year. FTA it states that it was the fact that they all shared all their pricing and inventory data with RealPage, which then determined the price using algorithms and therefore rental properties weren't competing against one another. When to me, there are simply no spare apartments, I've seen some complexes down to 1-2 units by the end of July. Lots of systems using competitors data and algorithms to price items, so was it simply the fact that too many people used RealPage, what if nearby properties didn't use RealPage and the rents went up anyway? I am not sure if this is price fixing, I don't know any landlords that use it, every home I've rented was with someone who owned 1-2 extra properties and just used Zillow or Craigslist. That being said, I price my rental properties against what similar square footage gets at nearby apartments... Sooo if they are going up my rent is going up as well, and I bet most landlords do this. So we've ended up accidentally price fixing the market I guess? I think it really depends on the internal communication and what they sold to landlords.

tootie 2y ago
Yeah, there's nothing inherently wrong with algorithmic pricing. Issues would start to occur if the pricing was actively manipulated and RealPage was used by so many landlords in some geographic areas that competition broke down. That may be hard to prove.
- skipkey 2y ago
  So I worked for RealPage for a few years in the late 90s and again in the mid 2000s, and at the time they didn’t hold a majority of the market. But it would not surprise me now if they held a majority of the market in large complexes today. At the time they were growing mostly by acquisition of competitors.
- ejstronge 2y ago
  A relevant excerpt from the complaint: > RealPage-defined submarkets identified in Appendix A are relevant markets in which the agreements between RealPage and AIRM and YieldStar users to align pricing has harmed, or is likely to harm, competition and thus renters. In each of these markets, the penetration rate for at least (i) AIRM and YieldStar, or (ii) AIRM, YieldStar, and OneSite ranges from at or around 29% to more than 60%.10
- radicality 2y ago
  The pricing is manipulated though. If you’re part of RealPage, it will “recommend” the prices to set for your apartments, except you as the landlord are only allowed to disagree a small % of the time, or else you can get kicked out from the apartment mafia. So to keep their customers happy, RealPage will configure it to keep increasing prices, and it’s not really in any landlords’ interest to disagree. I live in a building managed by a group that uses RealPage. They keep increasing prices and say “Computer says this is $X, can’t do anything, sorry”.
cjbgkagh 2y ago
I think the major difference is price is set at the margin, so only the marginal renter has to use the software in order to move the market. Since rental owners, like wealth, exist on a power law curve large numbers of properties are owned by very few people. I.e. it is possible for both the average landlord to not be using the software but the average property is owned by a landlord who is. The other thing is that normally there is an advantage to breaking the collusion which is what generally prevents them. AFAIK the software is capable of punishing people who break from the suggested price so this pushes the cost of maintaining the collusion onto the participants who have to put up with vacancies for longer than they would otherwise. So in my view you can have an implicit collusion, or a collusion in effect even without an explicit collusion and with most of the participants not participating in it. I also think this is one of the most important points of contention of our time. Our ponzi economy requires extracting monopolistic rents which is absolutely crushing the middle class and younger people. When I last visited SF downtown was a ghost town with many of the businesses that survived Covid being driven out by high rents - it appears that rental collusion has already been more damaging than a global pandemic.
bick_nyers 2y ago
Housing is pretty inelastic. I think people are just willing to suffer financially to avoid the fate of homelessness. Just because there aren't vacancies anywhere doesn't mean that the price is fully justified, because housing will take priority over groceries for a lot of people.
- RhodesianHunter 2y ago
  Housing supply is inelastic due to the time it takes to permit and built. Housing demand is more elastic than you suspect. People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely.
  - WarOnPrivacy 2y ago
    > People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely. This doesn't describe the major renter class who has few workable options to choose from. They take whatever they can get. Once they manage a place to live, they're likely trapped there because they don't have a wad of cash on hand (required to move). That's average renter difficulty. It can get far worse. In 2021, the few rentals available here got 400 applications/day. We beat out 50 applicants for one that was advertised for 2 hours (offered 6mos up front). We beat long odds and barely avoided homelessness (even tho we had good employment history + money in the bank). Many, many others were less lucky. Every rent-by-the-week hotel filled up, typically with people exhausting their savings.
    - bluGill 2y ago
      People also start to take on roommates or become roommates. People in general want a place of their own. However as rent goes up they will start to be willing to rent the upper bunk in a bedroom, and people who do have a place to live start to become willing to rent out part of their bedroom just to afford the rent. For most this is the last option they will take (homeless might be better if they can find a place to sleep the night outside)
weknowbetter 2y ago
I mean what can you do? The market is forcing you to raise rent. Your hands are tied.
Manuel_D 2y ago
Lots of people want to blame rising prices on price fixing, when there really is growing demand without commensurate increases of supply. They want a silver bullet to bring down prices, without tackling the underlying problems. > That being said, I price my rental properties against what similar square footage gets at nearby apartments... Sooo if they are going up my rent is going up as well, and I bet most landlords do this. This is essentially what RealPage does. It just automates calculating "what similar square footage gets at nearby apartments". It probably does other stuff like puts a premium on corner units or those with south facing windows.
- Sohcahtoa82 2y ago
  > Lots of people want to blame rising prices on price fixing, when there really is growing demand without commensurate increases of supply. They want a silver bullet to bring down prices, without tackling the underlying problems. Yup. The underlying problem is a single word: supply. Build more supply, the prices come down. But of course, developers know that. They don't want the prices to come down, so they don't build supply.
  - crooked-v 2y ago
    Developers don't build supply because most US cities have made it de facto illegal to do so. For the most extreme case, check out San Francisco, where as of June the city had permitted a grand total of 16 housing units. What developer is even going to bother trying under conditions like that?
- bick_nyers 2y ago
  I agree that the underlying issue is a lack of supply. However, if a landlord is commanding a 30% profit margin on a non-luxury apartment then I think they are contributing to the problem (to be clear, I'm not insinuating anyone in this thread is doing this). I think the only objective way to tell if it's priced too high is by the profit margin, but of course even that can be inflated if e.g. a developer took a huge margin on it before selling it to a new owner. As to what an "ethical and not terrible for society" profit margin would be is above my pay grade, but I would estimate 15%. It also probably depends on how easily you can make money on the stock market as well.
akira2501 2y ago
> I've seen some complexes down to 1-2 units by the end of July. And you're sure the building is actually occupied and the units haven't been strategically taken off the market? > I am not sure if this is price fixing, It is on RealPage's part. It's their stated _intention_. Whether cases should open against landlords who used it, I agree, I'm not sure, but it _is_ clear that RealPage broke the law here. > I think it really depends on the internal communication and what they sold to landlords. The real question is "does realpage charge landlords for it's service?"
pfisherman 2y ago
What you are doing is just good business. You are not implicitly or explicitly colluding with other property owners to set you prices. You are simply doing market research based on publicly available data and making an independent decision. Contrast this with a cartel that includes a significant number of landlords in your city (i.e. way more than just a couple of your buddies) that (1) shares non public info such as current occupancy rates, current lease terms and durations, etc., (2) sets prices as a bloc, and (3) enforces compliance on pricing targets. It’s qualitatively different from how you described your situation.
throwaway2037 2y ago
> rent has gone up 300% in 10 years, or around 10% per year From an outsider's view, this is a huge failure of local planners. That said, Orlando is a huge city with a population 2.5 million. I find it hard to believe that your statement applies to the entire city. Rents rising 10% per year (incredibly, really) is surely the sign of a hot/hip neighborhood where planning is way behind demand. In most places (middle class and below), it is hard to raise rent faster than inflation because the renter's income is the primary limiting factor. If their income does not rise fast enough, they will move away. If the area is not "premium" (attracts upper middle class and above), eventually units will sit empty for a long time, and rents will fall.

tootie 2y ago

Yeah, there's nothing inherently wrong with algorithmic pricing. Issues would start to occur if the pricing was actively manipulated and RealPage was used by so many landlords in some geographic areas that competition broke down. That may be hard to prove.

skipkey 2y ago
So I worked for RealPage for a few years in the late 90s and again in the mid 2000s, and at the time they didn’t hold a majority of the market. But it would not surprise me now if they held a majority of the market in large complexes today. At the time they were growing mostly by acquisition of competitors.
ejstronge 2y ago
A relevant excerpt from the complaint: > RealPage-defined submarkets identified in Appendix A are relevant markets in which the agreements between RealPage and AIRM and YieldStar users to align pricing has harmed, or is likely to harm, competition and thus renters. In each of these markets, the penetration rate for at least (i) AIRM and YieldStar, or (ii) AIRM, YieldStar, and OneSite ranges from at or around 29% to more than 60%.10
radicality 2y ago
The pricing is manipulated though. If you’re part of RealPage, it will “recommend” the prices to set for your apartments, except you as the landlord are only allowed to disagree a small % of the time, or else you can get kicked out from the apartment mafia. So to keep their customers happy, RealPage will configure it to keep increasing prices, and it’s not really in any landlords’ interest to disagree. I live in a building managed by a group that uses RealPage. They keep increasing prices and say “Computer says this is $X, can’t do anything, sorry”.

cjbgkagh 2y ago

I think the major difference is price is set at the margin, so only the marginal renter has to use the software in order to move the market. Since rental owners, like wealth, exist on a power law curve large numbers of properties are owned by very few people. I.e. it is possible for both the average landlord to not be using the software but the average property is owned by a landlord who is. The other thing is that normally there is an advantage to breaking the collusion which is what generally prevents them. AFAIK the software is capable of punishing people who break from the suggested price so this pushes the cost of maintaining the collusion onto the participants who have to put up with vacancies for longer than they would otherwise. So in my view you can have an implicit collusion, or a collusion in effect even without an explicit collusion and with most of the participants not participating in it. I also think this is one of the most important points of contention of our time. Our ponzi economy requires extracting monopolistic rents which is absolutely crushing the middle class and younger people. When I last visited SF downtown was a ghost town with many of the businesses that survived Covid being driven out by high rents - it appears that rental collusion has already been more damaging than a global pandemic.

bick_nyers 2y ago

Housing is pretty inelastic. I think people are just willing to suffer financially to avoid the fate of homelessness. Just because there aren't vacancies anywhere doesn't mean that the price is fully justified, because housing will take priority over groceries for a lot of people.

RhodesianHunter 2y ago
Housing supply is inelastic due to the time it takes to permit and built. Housing demand is more elastic than you suspect. People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely.
- WarOnPrivacy 2y ago
  > People have income on a curve, and at a certain point of price/quality will move further out and commute or move to a lower cost of living city entirely. This doesn't describe the major renter class who has few workable options to choose from. They take whatever they can get. Once they manage a place to live, they're likely trapped there because they don't have a wad of cash on hand (required to move). That's average renter difficulty. It can get far worse. In 2021, the few rentals available here got 400 applications/day. We beat out 50 applicants for one that was advertised for 2 hours (offered 6mos up front). We beat long odds and barely avoided homelessness (even tho we had good employment history + money in the bank). Many, many others were less lucky. Every rent-by-the-week hotel filled up, typically with people exhausting their savings.
  - bluGill 2y ago
    People also start to take on roommates or become roommates. People in general want a place of their own. However as rent goes up they will start to be willing to rent the upper bunk in a bedroom, and people who do have a place to live start to become willing to rent out part of their bedroom just to afford the rent. For most this is the last option they will take (homeless might be better if they can find a place to sleep the night outside)

weknowbetter 2y ago

I mean what can you do? The market is forcing you to raise rent. Your hands are tied.

Manuel_D 2y ago

Lots of people want to blame rising prices on price fixing, when there really is growing demand without commensurate increases of supply. They want a silver bullet to bring down prices, without tackling the underlying problems. > That being said, I price my rental properties against what similar square footage gets at nearby apartments... Sooo if they are going up my rent is going up as well, and I bet most landlords do this. This is essentially what RealPage does. It just automates calculating "what similar square footage gets at nearby apartments". It probably does other stuff like puts a premium on corner units or those with south facing windows.

Sohcahtoa82 2y ago
> Lots of people want to blame rising prices on price fixing, when there really is growing demand without commensurate increases of supply. They want a silver bullet to bring down prices, without tackling the underlying problems. Yup. The underlying problem is a single word: supply. Build more supply, the prices come down. But of course, developers know that. They don't want the prices to come down, so they don't build supply.
- crooked-v 2y ago
  Developers don't build supply because most US cities have made it de facto illegal to do so. For the most extreme case, check out San Francisco, where as of June the city had permitted a grand total of 16 housing units. What developer is even going to bother trying under conditions like that?
bick_nyers 2y ago
I agree that the underlying issue is a lack of supply. However, if a landlord is commanding a 30% profit margin on a non-luxury apartment then I think they are contributing to the problem (to be clear, I'm not insinuating anyone in this thread is doing this). I think the only objective way to tell if it's priced too high is by the profit margin, but of course even that can be inflated if e.g. a developer took a huge margin on it before selling it to a new owner. As to what an "ethical and not terrible for society" profit margin would be is above my pay grade, but I would estimate 15%. It also probably depends on how easily you can make money on the stock market as well.

akira2501 2y ago

> I've seen some complexes down to 1-2 units by the end of July. And you're sure the building is actually occupied and the units haven't been strategically taken off the market? > I am not sure if this is price fixing, It is on RealPage's part. It's their stated _intention_. Whether cases should open against landlords who used it, I agree, I'm not sure, but it _is_ clear that RealPage broke the law here. > I think it really depends on the internal communication and what they sold to landlords. The real question is "does realpage charge landlords for it's service?"

pfisherman 2y ago

What you are doing is just good business. You are not implicitly or explicitly colluding with other property owners to set you prices. You are simply doing market research based on publicly available data and making an independent decision. Contrast this with a cartel that includes a significant number of landlords in your city (i.e. way more than just a couple of your buddies) that (1) shares non public info such as current occupancy rates, current lease terms and durations, etc., (2) sets prices as a bloc, and (3) enforces compliance on pricing targets. It’s qualitatively different from how you described your situation.

throwaway2037 2y ago

> rent has gone up 300% in 10 years, or around 10% per year From an outsider's view, this is a huge failure of local planners. That said, Orlando is a huge city with a population 2.5 million. I find it hard to believe that your statement applies to the entire city. Rents rising 10% per year (incredibly, really) is surely the sign of a hot/hip neighborhood where planning is way behind demand. In most places (middle class and below), it is hard to raise rent faster than inflation because the renter's income is the primary limiting factor. If their income does not rise fast enough, they will move away. If the area is not "premium" (attracts upper middle class and above), eventually units will sit empty for a long time, and rents will fall.