5 ms·

Pricing software adds billions to rental costs, White House says

69 points by elorant 2y ago

bell-cot 2y ago
Um, yes? If they'd noticed (& done something about it) a few years ago, then Joe might not be facing eviction now.
to11mtm 2y ago
On one hand this is a 'duh' thing... At the same time, It's worth digging deeper and asking questions as to why/how we are repeating mistakes. By that, I mean, We have seen historically, 'oopsies' and/or 'problematic patterns' around 'automated trading' and feedback loops that can result. TBH we are likely seeing similar impact in used car market. Possibly all done by people who couldn't hack it in algorithimic automated trading...
- FireBeyond 2y ago
  To the users of this software, it isn't an oops at all, it's absolutely _desired behavior_. To hapless tenants, it is a negative. They're the _victims_ of the algorithm, not the users.
- tiew9Vii 2y ago
  I think the incentives are completely clear, it’s about maximising $$$, profit, returns. People are not making mistakes, it’s a conscious effort to increase profit as much as possible. The only mistakes is allowing this to exist and not regulating it out of existence.
  - wordpad25 2y ago
    maximizing profit is expect and desired behavior in a perfect market perfect competition in open market is supposed to push all profits to zero, maximizing value for consumers
    - Austizzle 2y ago
      Except the market isn't perfect and many companies actively work to decrease competition
- nothercastle 2y ago
  What’s wrong with the used car market? Prices are basically a commodity. https://www.cargurus.com/ https://www.cargurus.com/ aggregates national prices and makes price discovery a breeze.
asdasdsddd 2y ago
Disagree with algos being problematic. The crux of the issue is that vacancy needs to be taxed on rental units in high demand areas when its above a certain threshold.
- n4r9 2y ago
  The problem is not simply the use of algorithms. The problem is that the algorithm is coordinating prices for a large percentage of rented properties. It's effectively a cartel.
  - ryan29 2y ago
    You can see the same thing starting to happen in the domain industry. Registries are buying pricing data rather than setting their own prices, so high-value keywords end up having the same price across TLDs that should be competing with each other.
  - asdasdsddd 2y ago
    That's fine, if apartments are too expensive for people and landlords are penalized heavily, then the rent will come down otherwise landlords will be underwater. If tenants are still moving inspite of the high prices, then the price is probably right.
    - chimpanzee 2y ago
      > If tenants are still moving inspite of the high prices, then the price is probably right. Housing is a necessity. Demand for which is inelastic. The price will be paid regardless, via rent or purchase. And purchase is out of reach or unmanageable for many. Leaving rent as their only option. Also, in no particular order and not limited to: - Single or multi-year contracts. - Minimum space requirements for family size - Local social ties, extended family and friends - Dependency or ties to local services, groups, business - “Keeping up with Joneses” - Moving is a PITA - Comfort, familiarity, nostalgia - Work requirements and industry connections https://en.wikipedia.org/wiki/Price_elasticity_of_demand https://en.wikipedia.org/wiki/Price_elasticity_of_demand
dlcarrier 2y ago
Anything that provides information makes a market run smoother. In a healthy market, where supply can increase to meet demand, better information decreases prices. As it stands, with most states having regulations that severely limit housing supply, prices will keep increasing until birthrates drop or the rate of people moving out increases. The politicians that pass those policies are to blame, and any pricing information is just the messenger.
- YetAnotherNick 2y ago
  I don't have issue if the parameters the pricing operates is transparent and reviewed by government. e.g. What what you pay as tax depends on 100s of different factors.
- godzillabrennus 2y ago
  If the market was free I’d agree but that invisible hand likes to smack folks like you and me pretty hard…
  - anomaly_ 2y ago
    The government and its planning bureaucrats are the ones smacking you.
    - ahartmetz 2y ago
      That's something like a statement of religious faith, or about "true communism" if only someone implemented it correctly.
    - kevbane 2y ago
      [dead]
- chimpanzee 2y ago
  > Anything that provides information makes a market run smoother This is not necessarily true. Market failure can occur due to information which is provided asymmetrically or which facilitates collusion.
ethagknight 2y ago
“The big picture: The U.S. is in the grips of a housing affordability crisis — creating huge financial headaches for many Americans” This is just not true. Talking point being pushed by some group, I’m guessing those lobbying for subsidized housing programs. There’s an “affordability crisis” for ultra desirable locations, but across most of America, there’s plenty of underwhelming but functional housing to be had.
- redserk 2y ago
  Typically these desirable places have optional amenities that people want, like jobs. Not many tech positions available in Huntington, WV.
  - ethagknight 2y ago
    Pretty much every major US city besides NYC, LA, and SF is dealing with a massive over supply of multifamily housing
    - selimthegrim 2y ago
      New Orleans would like a word.
      - ethagknight 2y ago
        New Orleans is hovering around 92% occupancy across the market at $1,273/mo average rent. Plenty of room for both to compress. Very healthy. https://mmgrea.com/new-orleans-2q-2024-report/ https://mmgrea.com/new-orleans-2q-2024-report/
        selimthegrim 2y ago
        Have you looked up the average wage in Orleans Parish lately? Before the pandemic and Hurricane Ida, $1100/month was about the breakeven cost basis for one side of a shotgun. But I will read this report. Thank you for the reference. e: from your link - “Conversely, demand for workforce housing assets—which constitute about 37% of New Orleans’ apartment inventory—remains weak, indicating financial strain among lower-income households in the area. Construction Trends Construction has slowed significantly in the New Orleans multifamily market in recent quarters. The current pipeline of 752 units under construction represents just 1.1% of the existing rental housing stock, starkly contrasting with the national average of 4.0%. This limited construction is evident in the trailing 12-month total of new deliveries, which amounted to a modest 82 units”
ChrisArchitect 2y ago
Actual article: https://www.whitehouse.gov/cea/written-materials/2024/12/17/the-cost-of-anticompetitive-pricing-algorithms-in-rental-housing/ https://www.whitehouse.gov/cea/written-materials/2024/12/17/...
ChrisArchitect 2y ago
Related U.S. case discussion from 3 months ago: DOJ sues realpage for algorithmic pricing scheme that harms renters https://news.ycombinator.com/item?id=41330007 https://news.ycombinator.com/item?id=41330007
ChrisArchitect 2y ago
Related: Landlords Are Using AI to Raise Rents https://news.ycombinator.com/item?id=42353948 https://news.ycombinator.com/item?id=42353948

69 points by elorant 2y ago

Um, yes? If they'd noticed (& done something about it) a few years ago, then Joe might not be facing eviction now.

On one hand this is a 'duh' thing... At the same time, It's worth digging deeper and asking questions as to why/how we are repeating mistakes. By that, I mean, We have seen historically, 'oopsies' and/or 'problematic patterns' around 'automated trading' and feedback loops that can result. TBH we are likely seeing similar impact in used car market. Possibly all done by people who couldn't hack it in algorithimic automated trading...

FireBeyond 2y ago
To the users of this software, it isn't an oops at all, it's absolutely _desired behavior_. To hapless tenants, it is a negative. They're the _victims_ of the algorithm, not the users.
tiew9Vii 2y ago
I think the incentives are completely clear, it’s about maximising $$$, profit, returns. People are not making mistakes, it’s a conscious effort to increase profit as much as possible. The only mistakes is allowing this to exist and not regulating it out of existence.
- wordpad25 2y ago
  maximizing profit is expect and desired behavior in a perfect market perfect competition in open market is supposed to push all profits to zero, maximizing value for consumers
  - Austizzle 2y ago
    Except the market isn't perfect and many companies actively work to decrease competition
nothercastle 2y ago
What’s wrong with the used car market? Prices are basically a commodity. https://www.cargurus.com/ https://www.cargurus.com/ aggregates national prices and makes price discovery a breeze.

asdasdsddd 2y ago

Disagree with algos being problematic. The crux of the issue is that vacancy needs to be taxed on rental units in high demand areas when its above a certain threshold.

n4r9 2y ago
The problem is not simply the use of algorithms. The problem is that the algorithm is coordinating prices for a large percentage of rented properties. It's effectively a cartel.
- ryan29 2y ago
  You can see the same thing starting to happen in the domain industry. Registries are buying pricing data rather than setting their own prices, so high-value keywords end up having the same price across TLDs that should be competing with each other.
- asdasdsddd 2y ago
  That's fine, if apartments are too expensive for people and landlords are penalized heavily, then the rent will come down otherwise landlords will be underwater. If tenants are still moving inspite of the high prices, then the price is probably right.
  - chimpanzee 2y ago
    > If tenants are still moving inspite of the high prices, then the price is probably right. Housing is a necessity. Demand for which is inelastic. The price will be paid regardless, via rent or purchase. And purchase is out of reach or unmanageable for many. Leaving rent as their only option. Also, in no particular order and not limited to: - Single or multi-year contracts. - Minimum space requirements for family size - Local social ties, extended family and friends - Dependency or ties to local services, groups, business - “Keeping up with Joneses” - Moving is a PITA - Comfort, familiarity, nostalgia - Work requirements and industry connections https://en.wikipedia.org/wiki/Price_elasticity_of_demand https://en.wikipedia.org/wiki/Price_elasticity_of_demand

dlcarrier 2y ago

Anything that provides information makes a market run smoother. In a healthy market, where supply can increase to meet demand, better information decreases prices. As it stands, with most states having regulations that severely limit housing supply, prices will keep increasing until birthrates drop or the rate of people moving out increases. The politicians that pass those policies are to blame, and any pricing information is just the messenger.

YetAnotherNick 2y ago
I don't have issue if the parameters the pricing operates is transparent and reviewed by government. e.g. What what you pay as tax depends on 100s of different factors.
godzillabrennus 2y ago
If the market was free I’d agree but that invisible hand likes to smack folks like you and me pretty hard…
- anomaly_ 2y ago
  The government and its planning bureaucrats are the ones smacking you.
  - ahartmetz 2y ago
    That's something like a statement of religious faith, or about "true communism" if only someone implemented it correctly.
  - kevbane 2y ago
    [dead]
chimpanzee 2y ago
> Anything that provides information makes a market run smoother This is not necessarily true. Market failure can occur due to information which is provided asymmetrically or which facilitates collusion.

ethagknight 2y ago

“The big picture: The U.S. is in the grips of a housing affordability crisis — creating huge financial headaches for many Americans” This is just not true. Talking point being pushed by some group, I’m guessing those lobbying for subsidized housing programs. There’s an “affordability crisis” for ultra desirable locations, but across most of America, there’s plenty of underwhelming but functional housing to be had.

redserk 2y ago
Typically these desirable places have optional amenities that people want, like jobs. Not many tech positions available in Huntington, WV.
- ethagknight 2y ago
  Pretty much every major US city besides NYC, LA, and SF is dealing with a massive over supply of multifamily housing
  - selimthegrim 2y ago
    New Orleans would like a word.
    - ethagknight 2y ago
      New Orleans is hovering around 92% occupancy across the market at $1,273/mo average rent. Plenty of room for both to compress. Very healthy. https://mmgrea.com/new-orleans-2q-2024-report/ https://mmgrea.com/new-orleans-2q-2024-report/
      - selimthegrim 2y ago
        Have you looked up the average wage in Orleans Parish lately? Before the pandemic and Hurricane Ida, $1100/month was about the breakeven cost basis for one side of a shotgun. But I will read this report. Thank you for the reference. e: from your link - “Conversely, demand for workforce housing assets—which constitute about 37% of New Orleans’ apartment inventory—remains weak, indicating financial strain among lower-income households in the area. Construction Trends Construction has slowed significantly in the New Orleans multifamily market in recent quarters. The current pipeline of 752 units under construction represents just 1.1% of the existing rental housing stock, starkly contrasting with the national average of 4.0%. This limited construction is evident in the trailing 12-month total of new deliveries, which amounted to a modest 82 units”

ChrisArchitect 2y ago

Actual article: https://www.whitehouse.gov/cea/written-materials/2024/12/17/the-cost-of-anticompetitive-pricing-algorithms-in-rental-housing/ https://www.whitehouse.gov/cea/written-materials/2024/12/17/...

ChrisArchitect 2y ago

Related U.S. case discussion from 3 months ago: DOJ sues realpage for algorithmic pricing scheme that harms renters https://news.ycombinator.com/item?id=41330007 https://news.ycombinator.com/item?id=41330007

ChrisArchitect 2y ago

Related: Landlords Are Using AI to Raise Rents https://news.ycombinator.com/item?id=42353948 https://news.ycombinator.com/item?id=42353948