I was disappointed to see this was not about Blackrock and other private equity groups.
https://www.marketplace.org/2022/03/02/how-private-equity-is...
It's pretty obvious that this is a net negative on society.
You could instead imagine a (still completely fictitious) figure that makes your argument look bad -- e.g., that the raise in rates causes a 0% drop in occupancy. Then the landlords/algorithm win by raising prices.
One reason occupancy rates might remain relatively stable even in the face of rising prices is if consumers have relatively few better options, because e.g. all of your competitors collude to also raise their rates similarly.
Housing demand isn't really that inelastic. People will move to less crowded cities if they become too expensive. Americans tend to have much more living space per capita than most of the world, so there is a lot of room to move in with roommates or family.
> all of your competitors collude to also raise their rates similarly.
Realpage doesn't control the prices for the majority of housing in the US, the majority of rental units in the US, or even the majority of multifamily rental units in the US. If they tried to facilitate collusion, their customers would simply lose money.
The vast majority of people die within 10 miles of where they were born. People want to live near their families, and for the most part do not want to move to another city, and won't even if their rent is difficult to afford.
> Realpage doesn't control the prices for the majority of housing in the US, the majority of rental units in the US, or even the majority of multifamily rental units in the US.
They don't need to. They just need to control the prices for particular cities, because market prices are heavily tied to regions and not to the entire US. Detroit's housing market crashing didn't affect SF's rent.
If people didn't have spare money, rents wouldn't be growing (As nobody would be able to pay), and if vacancies were higher, landlords would have to accept lowball offers.
There is no mechanism for keeping other landlords from leaving the software, and there are multiple competing alternatives.
Sure, just like Uber is "ride sharing" where the drivers pick the price. "We're all just using the same software" is a thin veneer over what amounts to collusion to raise prices.
> There is no mechanism for keeping other landlords from leaving the software, and there are multiple competing alternatives.
The mechanism is "you lose money" (countries can leave OPEC, but it's still a cartel), and if you read the article the competing alternatives are getting bought out.
"In addition, we understand that the Antitrust Division allowed RealPage to acquire one of its closest competitors, Lease Rent Options, in 2017 – one of more than 10 acquisitions RealPage has made since 2016."
It's pretty effective. https://www.propublica.org/article/yieldstar-rent-increase-r...
"The approval allowed RealPage to acquire its only significant competitor, Roper said, adding, 'I was surprised the DOJ let that go through.'"
"In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage."
But nothing stops a landlord from undercutting any other landlord. It's the difference between the Uber 'Marketplace' and an actual market.
> The mechanism is "you lose money"
Yes, that's a market mechanism, it's not a cartel mechanism.
Yes, that's the point. This fact is getting them in hot water in a variety of jurisdictions, as independent contractors are supposed to set their own rates.
RealPage is trying to play the same regulatory evasion games - "it's not collusion, everyone just uses our prices". I hope it ends poorly for them.
I am missing this point. Uber drivers can set their rates and not take the rides that are below those rates, can't they? Or do you mean they have to be able to make exactly the rate they set, e.g. the driver's rate is $21.25/h, Uber offers only $30/h and more and the driver takes Uber to court saying he could not set his desirable rate and had been paid more?
> You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.
It's a jurisdiction-by-jurisdiction battle at the moment, but the tide seems to be turning. A number of judges have already ruled that Uber and similar companies exercise enough control over their "contractors" for them to be over the line into employee territory.
For landlords, yes.
Not for tenants. That's the crux of the issue here. Tenants have no way of knowing what is happening or why and so the market becomes an anti-competitive cartel. This is doubly so in markets like Seattle, where a single-digit number of management companies cover large swathes of the market.
It's akin to people defending binding arbitration clauses by saying "just choose another competitor." When all of the competitors in the market, especially in a must-have-it-or-else market like housing, are doing the same thing in the same way, there's no choice and no competition.
> There is no mechanism for keeping other landlords from leaving the software
Nobody is saying that landlords are being victimized.
It promotes a perverse incentive for everyone to share business information and have the same pricing models and for the model to promote rising prices consistently across all landlords.
It should be banned because the incentive structure discourages (or eliminates) competition.
It doesn't, and it can't. That's what makes it not a cartel.
The problem is not collusion, the problem is supply shortage. All the sellers raising prices isn't illegal, or cartel-like. All the sellers punishing a seller that lowers prices would be - but it doesn't happen. Not with landlords, at least.
I think our current land policy is pants-on-head stupid, but this isn't the problem with it.
Your definition means OPEC isn't a cartel. (That is... incorrect.)
If these landlords were colluding with eachother to punish defectors that undercut them, that would be a cartel. If they are all reacting to a shortage by raising their prices, that just makes them... Market agents.
It’s just in a broken market - there isn’t enough supply of housing, so prices are going up. And because everybody needs housing, it feels icky to many people (I’m one of them, but my solution would be relax zoning and allow more housing).
Unless using this system requires participants to set a price, I’m not sure it meets the definition of price fixing. A landlord can still underprice to guarantee a tenant quickly. Or overprice in the hopes they catch a low-info, high-income tenant.
OPEC works because they all move together. One of them raising or lowering production alone doesn't do much; all of them doing it at similar times does.
Same with RealPage. By having nearly everyone use it, nearly everyone's pricing moves in a coordinated fashion, and they collectively reduce the chances of downward price pressure.
Landlords don't always advertise, and they also negotiate rents. Knowing the actual market price isn't easy (and sometimes not possible), because that information isn't publicly available and certainly isn't real-time.
RealPage is getting private market information from landlords, and using it to coordinate rent prices, including coordinating actions to remove supply from the market to artificially increase prices. This removes competition from an otherwise competitive market. This is collusion via a middleman.
Which just means that the 1% can then extract as much of that 30% as possible returning the 29% right back tonwhere they effectively were before the growth (not to mention anyone that got a minimum wage increase)
This is openly stated in their investment prospectuses, it's not a secret.
When we previewed home all the windows were open. After signing paperwork we closed up windows. Hour later we noticed smell. 3 month of being told it was carpet. Floor, paint. They inspecting and saying everything is fine.
Our deductive reasoning skills where nil fairly quick into this.
Finally called gas company even. They started screaming for us to run From the road. Didn’t even get to the house before alarms went off. Kids went from gifted to special needs. I went from top programmer to taking hours to figure out laundry.
Doctors wouldn’t say gas caused injuries. So lawyers didn’t care.
About 70% Back to normal 4 years later.