I saw RealPage's crappy rent-jacking-up software so you don't have to
cohost.org
cohost.org
It's hard to imagine a clearer, more blatant description of cartel price fixing.
This is like calling your pyramid scheme "Pyramidal Inc.".
Is it possible for the suit to result in charges brought against all users of RealPage? They are active participants, after all.
I think it's more accurate to say it boils down to "our sole underlying principle is our own advantage, and the privilege of not even having our advantages challenged or negotiated."
But otherwise, I quite agree.
Basically we create markets that enable (sometimes force) transactions in which one side has high amounts of leverage, and allow that leverage to increase over time. We don't view this high leverage as a problem. And, instead of fixing the issue of ever-increasing leverage, we instead exhort people to get to a position where they can be exerting it.
It's no wonder many feel like the game is rigged against them.
Unfortunate phrasing? If the system is really rigged, then you don't just feel it is rigged. You discover, understand, realize - know it is rigged against you?
These aren't sports teams, you don't just get together with your buds and see how it plays out over a couple drinks. "Aw dang I really thought we had it but you brought back child labor right at the buzzer there, rough one today."
No, wealthy people are for price collusion because it gives them more power, and they are against unions because they take away some of that power. Some things actually are that simple.
Internet commenters love to group opinions into a camp and then call them hypocritical. (Ex: capitalists love rent market manipulation but hate unions, those hypocrites!)
Of course, that’s not true, most capitalists would not want price fixing - something generally done under centralized planned economies.
Capitalism would be someone coming in and realizing the prices are inflated and undercut the rent prices while still being profitable.
That number has climbed faster than inflation for some time and is the largest driver of increased multifamily development costs.
Want cheaper housing? Make it easier to build housing.
"""One night, on my way home from work, I pushed the wrong elevator button and got out on the floor below mine without realizing it. My key wouldn’t fit the lock to what I had assumed was my door, so I turned the knob and stepped, to my astonishment, into a completely empty, totally untouched one-bedroom. I turned around and beelined to the elevator, worried that I’d get busted for trespassing, when I noticed strips of masking tape covering the door frames on all of the other (presumably empty) apartments on the floor.
This was how I became aware of “warehousing,” the practice by which landlords keep unrented apartments off the market to create artificial scarcity. Building owners have always done this, especially in new constructions with lots of virgin inventory, because why give renters the upper hand if they don’t have to?
But they really started doing it during the pandemic. On a 2022 episode of the real-estate-industry podcast Talking Manhattan, Gary Malin, COO of the Corcoran Group, made a surprising claim: “At one point during the downturn, the vacancy rate in the city was close to 25 percent,” he said. “You had owners who were sitting on hundreds if not thousands of empty apartments.”"""
If there are extremely wealthy entities that can afford to soak up enough supply to meaningfully impact market prices, making it easier to build new housing is likely part of the equation, but it may not be the silver bullet. I don't know how many units are held unoccupied, but as someone from Detroit, I'd advise against letting supply get too far ahead of demand (Context: a major housing surplus developed in Detroit as the population dropped from ~2M in 1960 to ~0.6M today, and this surplus destroyed the value of homeowner's equity and lead to abandonment, blight, and massive arson rates).
What we have is a complete lack of top-down management to allocate it efficiently.
If we combined Soviet economics and modern Big Data, we could solve this easily-- mandate that economic engines are sited where housing gluts exist, and assign out housing to optimize things like average commute length.
Problems in real-estate are almost always government created IMHO and not "capitalism".
The government enforces capitalism laws (rather than socialist or chartalist) so how do you distinguish?
But who buys the government?
[1] https://livebaltimore.com/neighborhoods/madison-eastend/
Prices are set on the margin, you need a few landlords to start to feel capital pressure to drop rents.
Yeah, I can't imagine there would be any unintended consequences to that.
In what world does raising the cost of providing housing cause landlords to reduce rents? More likely it causes landlords to stop renting. See the consequences of the rent control regulations in NYC, for example.
Low availability keeps prices high with no need to worry about things like quality. There is therefore no incentive to build to increase supply. When a market is this dysfunctional, state intervention is the only way forward. Build publicly owned housing and rent it affordably.
This probably won’t happen either, because so many in government are also landlords.
Edit: Wow, so many downvotes for advocating public housing.
And your No True Scotsman example is typically heard in reference to communism in USSR/China.
I'll choose my billionaires over famine any day.
If this effect isn't intuitive to you, consider what happens when the market for something is completely removed from government involvement, like the global market for cocaine. Or a market that develops in the absence of any kind of centralized authority, like Somalia.
That's what happens to every market unless a state intervenes. The invisible hand of the market trends towards long term warlord/mafia type arrangements unless the public is organized enough to stop it.
The global market for cocaine is highly regulated by very violent men with guns.
It is for that reason that drug consumers favor legalization but drug suppliers oppose it.
The interesting part is who those men with guns are accountable to.
Cartels are very much capitalist, because they create more profits for everyone involved. The more parties you get involved, the better it is for all of them, and the worse is it for any competitors who do not join.
Cartels certainly aren't free markets. To keep those you need policy which keeps them that way.
Power tends to accumulate when government actions restrict voluntary trade that would have otherwise proceeded. That is a characteristic of governments not of "capitalism", IMHO.
The capitalist class is likely to be the owner both of the corporation you work for, and of the housing you live in, so you have the same power struggle with the same people.
People owning their own homes, and small landlords push back against that, but the trend is that the owning class owns everything
Edit: As with all just about anything. It looks like, people are hostile of the idea of "presumption of innocence" when that requires them to question their priors.
They definitely are! Price fixing ensures higher rent for the whole cartel (which is comprised of their customers). And enforcing cooperation is decidedly a good thing, because cooperation is required to keep prices artificially inflated.
What Realpage gains from creating a cartel is a really sticky customer base. I don't think it makes sense as a model because it seems to be clearly illegal, but putting that aside they're delivering a lot of value to their customers and are getting paid for it - it's definitely a sensible business model.
Price fixing ensures higher profits for the entire market, not just the cartels. Those outside the cartel equally benefit from the price fixing as cartel members, but that no pressure to constrain supply, which puts them in a strictly better position. For example, OPEC enabled the fracking industry and when OPEC loosened their price fixing, in 2019, many of these companies went bankrupt.
> What Realpage gains from creating a cartel is a really sticky customer base.
So that's why they allegedly threaten to fire their customers when they don't follow their pricing recommendation? It would make much more sense to simply offer the best pricing product.
> The reason why I'm skeptical is because "cartel as a service" doesn't make any sense as a business model.
It absolutely does. The challenge with a cartel is communication and coordination: ensuring the members know what prices they are supposed to set, and pressuring them all to follow along. Realpage provides exactly that.
> As one Lessor explains, while “we are all technically competitors,” RealPage “helps us work together,” “to work with a community in pricing strategies, not to work separately.”
[1] https://www.hausfeld.com/media/550bhzyp/realpage-complaint-f...
There is an additional mechanism that creates this dynamic, where properties (especially commercial ones) are valued based on the price of leases. For this reason, it can be better for landlords to let a property stay empty with a higher listed rent than to let it open up, if they are renewing their lease or borrowing against it.
Your revenue in commercial real estate is imaginary. If your building is vacant 100% of the time for the year, your revenue is 12 months x your desired rent.
Then you have an expense of 12 months vacancy.
You can get loans based on your revenue.
Additionally, it's the reason you see concessions of 1-2 months free all the time - but landlords will never reduce the rent.
concessions are expenses. Revenue is 100% of their desired rent.
Perhaps instead of a covenant it could be more implicitly enforced by suggesting if there is a revenue drop they’ll revalue the property and force the landlord to make up the difference which could be financially ruinous for some.
Can't they extend the trick, so that they have one unit that rents at $100B that always has the vacancy expense of $100B? Then they can set the other rents as they like with little impact to their revenue
The commercial landlord financial infrastructure is broken, but gameable.
Also, a land value tax would fix this (and many other real estate market distortions)
Smart move: vacant properties are devoid of voters.
The second is when you get together and say, “1bd studios are $1200, agreed?” This explicit coordination is illegal. IANAL, but this looks closer to the second.
Not "perfectly". I think some companies have gotten into trouble doing this.
There is something very wrong with a software based price fixing cartel.
Sure seems like RealPage is price fixing then
Essentially, one can configure RealPage (and RealPage seems to make this suggestion) to use their auto-price tool by default and require management approvals if employees want to set the price to something else.
If I'm buying a Playstation at Walmart, chances are the person at the checkout counter can't change the price directly and give me a discount. They probably can call over a manager who could approve a price change because they can see I'm a really cool person who should get $50 off this Playstation.
I agree the article is very clear. The approvals team is the management of the property.
From the article:
> If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required.
This snippet is in the "..." from the above comment. Funny they snipped out this extremely critical part of the quote to show who does the approval.
Where does it say RealPage employees need to approve the price?
> Specifically, every morning, RealPage provides participating Lessors with recommended price levels. Lessors typically must communicate to a RealPage “Pricing Advisor” that they have “accept[ed]” or “confirm[ed] the “approved pricing” within a specified time frame. If Lessors wish to diverge from the “approved pricing” they must submit reasoning for doing so and await approval. RealPage encourages participating Lessors to have daily calls between the Lessors’ employees with pricing responsibility and the RealPage Pricing Advisor.
So every day an employee at the Lessor must tell a Pricing Advisor -- a flesh-and-blood RealPage employee -- that they accept the pricing provided by RealPage. Further, to reject the pricing, they must explain to the Pricing Advisor why they are rejecting the pricing in writing.
It IS confusing because it goes on to say in the following paragraph that said requests also require further approval from a manager at the Lessor.
Still, the impression given to the property's management team is that a person (possibly a customer service grunt) is doing some kind of "final review," manually clicking a box or even just making sure they don't drop below 80% acceptance.
It's difficult to imagine a reason why a property owner should have to appeal to "management" to vary the prices of their own asset that doesn't involve "management" being an cartel body.
By whom? It's rather ambiguous (as is so oftent he case with the passive voice), I can see how you and the other person drew different interpretations.
Second, this isn't playstation though is it? But staying with this example, if I go get a $50 meal my server very much can adjust my bill 'I removed X', 'I comped Y' happens all the time. If I go to a matress store/furniture store the sales person very much has the ability to lower my price arbitrarily on items way more expensive than a Playstation. Your 1 example isn't really all that relevant.
I dunno, I definitely have some posts where I have to wait for the reply link to show up to write a reply.
> if I go get a $50 meal my server very much can adjust my bill 'I removed X', 'I comped Y' happens all the time.
And usually behind the scenes they got a supervisor or manager approval for doing such a thing, or will probably have to explain the deviance from normal pricing later.
> If I go to a matress store/furniture store the sales person very much has the ability to lower my price arbitrarily on items way more expensive than a Playstation.
Most times that I've negotiated pricing for things (cars, mattresses, etc.) outside of private party the final price was subject to some kind of supervisor/manager approval. I can't think of a single time where the final sale for some negotiated price didn't have some approval process to it.
If a business just allows their front of line employees to arbitrarily set prices without any kind of review, their business probably isn't going to do too well. The front of line sales people probably don't have all the information as to why the company is wanting to set the prices a certain way, and without that information they're setting prices rather arbitrarily. This could lead to some pretty massive damages to the company.
If a waiter just decides to start only charging $1 for the $5 burgers, the business is going to have a problem.
J/K, I believe it has something to do with karma level. You still have a pretty low karma amount.
(in Coach Z voice) "That happened one time!"
TransAmerica owns an insurance MLM called World Financial Group. I was unfortunate enough to be approached by one of their salespeople at a meetup, and the number on the business card he gave me was, I shit you not, 1-800-PYRAMID. A reference to the TransAmerica Pyramid Building in San Francisco, but still.
But having someone approve pricing? That is clearly something worth prosecuting and heavily fining for.
Uh, OPEC?
Saying OPEC doesn't fix prices is a nonsense statement that does nothing but split hairs. OPEC engages in price fixing as set forth by the FTC, though they are not subject to the FTC. [2]
Price fixing is a term of art that doesn't just mean the specific price of a sale is fixed. Price fixing can also mean that prices are indirectly fixed by production quotas or capacity. OPEC exists for the very reason to set production quotas or capacity. "OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries" [3]
[1] https://www.forbes.com/sites/briankoberlein/2017/01/11/earth...
[2] https://www.ftc.gov/advice-guidance/competition-guidance/gui...
cartel [1]
noun
a group of similar independent companies who join together to control
prices and limit competition:
* an oil cartel
If there's any integrity left in our legal system, this will be a slam dunk for renters.
I suspect there’s a lot of other price coordination schemes going on under the surface of our society just like this. The pandemic gave them cover, but the coordinated effort to raise prices destroys the efficient market hypothesis as does the gargantuan nature (and influence) of single actors within industries.
There is no future for capitalism without harsh enforcement and trust-busting on this front.
There's no need for coercion. The landlords themselves are greedy (I don't think any more so than any other investor class).
Landlords being greedy isn't really a problem. They're going to try to get the highest rent. That's capitalism.
It's supposed to work in a COMPETITIVE market.
RealPage fixing prices breaks that. It's clearly causing consumer harm and anti-competitive.
>efficient market
That's already been destroyed by 50 years of city-enforced redlining and NIMBYism.
> There is no future for capitalism
My honest opinion -- We don't need an efficient market. We don't need extreme capitalism. We need housing for everyone.
We need government to step in and cap housing prices, build more housing, and drive away the 80-year-old farts with 15 houses still trying to extract money from poor college students.
Housing should be built to LIVE in, not as an investment.
Look, if you want more housing we have to let developers build more housing. Many areas in the country put in restrictions like limiting the height of new buildings because it's 'nice' not to have the views of the sky by blocked by a new building.
Well nice costs something, and in this case it's housing scarcity.
Not if you have the government build housing.
We need something like Singapore's Housing Development Board (HDB) which keeps reusing the same architectural designs and elements for simple, functional, repeatable housing that just works.
Singapore also has private-built condos, for those who want luxury, but the HDB flats are perfectly functional, dignified, clean, and comfortable. About 80% of Singaporeans live in government-built housing. Homelessness is almost nonexistent.
Taxing land value -- this unfortunately leads to them passing on the taxes to renters, and rental housing becomes ever more unaffordable
How about we just build a lot more housing and let the chips fall where they may. Shouldn't even need to tax empty housing, either, if we build enough then the market can fix the rest pretty easily.
The whole reason we have a housing problem to begin with isn't capitalism, it's government restrictions on building. Urban grown boundaries, zoning, you name it.
RealPage basically just put themselves in the position of running the market.
There are a lot of reasons for wealth inequality, but finding ways to extract more profits off the same product or industry erodes society over time. I don’t know what could practically be done about all of this, but left unchecked, this will continue well into the future.
> Here is how platforms die: first, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves. Then, they die.
https://pluralistic.net/2023/01/21/potemkin-ai/
I think your idea of this happening in a cycle, with the company switching back to diverting its surplus back to its customers at the end before going back around again is an interesting one. I don't doubt it's possible, and that some companies have pulled it off from time to time. But the ability to win back trust from customers are you've spent two phases of the cycle abusing them seems like a tough hill to climb, and I think it's likely a lot of companies will fail there.
It's probably easiest for a company at the end of the cycle, to be acquired by a new up-and-comer who is still on its first round of diverting surpluses to its customers, to best leave its toxic reputation behind.
I think in software the exploit phase negatively impacts the culture of the developers in a way that is difficult to recover from. The best have left and the most of those who remain probably should be fired. Probably easier to start a new company from scratch, "Don't boil the ocean".
Maybe a good example could be in chip manufacturing where hiring someone like Jim Keller sends a signal that the company is entering a build phase.
Lacoste is a brand that was exploited to near death and explicitly went through a build phase a few years ago and revived itself. Huge marketing spend, lowered prices to target younger people, and I have no idea if they changed quality - not my field. I think it's more obvious trend in fashion where the underlying product doesn't fundamentally change.
Then there are B2B markets which have high volumes and low margins and in these industries reputations would be paramount and the customers more savvy and less exploitable. It would make sense to try to find a profitable steady state as soon as possible and only make minor changes.
So I guess the build-exploit cycle makes sense if assuming an efficient markets devoid of people with money willing to over pay for things they shouldn't.
It is a lot of work as the big companies will buy brands with good names because of this reason (and will proceed to make them shitty).
After this phase the few remaining companies will attempt to find a way to entrench a regulatory monopoly and survive off of rent seeking behaviors rather than actual work.
How do we deal with erosion in other situations?
Another thought I had just now is that historically prices were static until an event happened to cause in increase, now prices are becoming dynamic and monotonically increasing unless an event happens.
Edit: The price collusion is greed/growing pains for prices being dynamic by default.
This is another social norm that is being discarded by modern society. You don’t go to a store two days in a row and see different prices without a good reason.
… Unless that “store” is Amazon, but maybe that’s in support of your point as it’s “modern” relative to legacy retail. However, in this case it’s maybe more that pricing reflects fundamental shifts in the marketing/retail/fulfillment backend over the past decade-plus than a “social norm” being discarded. No profit seeking business would leave money on the table willingly —- greed has always been the default, new tools will always come along to enable it as old tools become less effective.
Prices should roughly double every two decades with “normal” inflation. However over past decade or two we haven’t quite had “normal inflation” and we’ve also had somewhat weirdly static prices for some consumer goods (thanks easy capital + efficiencies from MBAs/offshoring/etc?) and yet unhinged price increases in other areas (college ed, medical care). The overall system has some rebounding/balancing to go (both at micro and macro level) before pricing changes have a clearer relationship to the fed rate. There’s an entire generation of people only knowing zero-percent-interest and sub-two-percent inflation rates as the norm and some thinks those days will return once [whatever now is] passes.
And yet this generation of low interest rates has gotten progressively and significantly poorer than previous generations. There’s lots of pieces of this at work.
The term has a rich history under the phrase: "consumer surplus."
We drop rocks on it?
It's hard to imagine this being tolerated a century or more ago.
In other words, they blend in too well.
> Maybe we're just far more docile.
I think it's far more sinister than that. People and companies have learned how far they can push things without invoking outrage and how to release tensions by pretending to have a change of heart. So now they're constantly toeing the line and while each push is small, they are almost constant. Resulting in far greater violations in total.
Of course, that relies on the bread of the bread and circuses staying cheap enough to keep the plebians pacified. If not...a recent example would be the Arab Spring.
Half kidding, half not.
There are plenty of competitors to See's candies. Just buy from them.
I’ll leave you with this: https://youtu.be/X29p13cAT1g?t=17
I suggest you to get out of your first-world bubble. Somehow you seem to think that everyone is entitled to luxury.
> The percent of people’s average income spent on most sectors has gone up over time.
First of all, that's a weird statement. The percent of people average income spent on most sectors is close to 100%. Ratios will change, but they don't indicate anything if you don't know how to read them.
What's your interpretation of this graph? Is it "billionaires are making movies more expensive and people are forced to save on food"?
https://www.ers.usda.gov/webdocs/charts/58367/food-prices_fi...
That currently legal actions such as raising prices because a brand wants to move up-market should be made illegal?
I understand there's no way to 100% guarantee such actions will be punished, if it does occur, but clearly it's already not accepted by society.
Make your government ensure market competition, and stop it from harming said competition an declaring winners.
The problem is not that companies are able to increase prices and improve their margins. That's good!
The problem is that our institutions (government, journalism, small business entrepreneurship) have reneged on their role of promoting competition, leading to a lack of fear of competitors in companies, leading to an increased ability by them to increase prices.
There should be more self-reflection on why price increases are possible, and redress of those causes, versus attempting to treat the symptom.
#1 place to start looking -- how to balance the ultra-high efficiency of consolidated firms with their ability to deploy overwhelming capital in novel industries to crush competition.
Or in other words: "How do we make it so that starting up a Facebook or Google or Microsoft competitor today is a reasonable?"
E.g. instead of putting price caps on necessary-but-low-volume medications, look into why it was able to collapse into a single-supplier market
That's going a bit too far. Under perfect competition there aren't any profit margins: everything sells at marginal cost. Real-world markets won't be like this, but they can get reasonably close. If there are large and increasing profit margins, that's a sign something has gone wrong.
Also, we need to be realistic about natural monopolies. Sometimes the competition we want isn't in the cards, and treating the symptoms really is the right answer. If that necessary-but-low-volume medication has sharply declining costs with increasing production, as many things do, there just aren't going to be enough suppliers to build a competitive market. Competition policy is great, but it can't do everything.
Obviously the goal of a functioning system would be that they run into competition restraining them from doing so.
And 100% agreed on natural monopolies, although I believe the classification should be the exception rather than risk being a rule for "things we don't like."
True, but that includes the cost of capital, so liquidity theoretically remains adequate and capital provision/replacement is just a business function rather than the business function.
The problem with capitalism is that it's totalizing; the idea that the whole point of society should be making more and more wealth forever is kind of ridiculous when you think about it, like deciding that it'd be great for your social body to get diabetes. It's ridiculous in the same way that pure laborism would be (everyone should work hard, never mind at what) or pure consumerism (everyone should have all the stuff they want, all the time).
Now the position seems to be to let them do whatever they want and shield them from other governments and competition if necessary.
>Public Opinion Has "near-zero" Impact On U.S. Law.
>Professors Martin Gilens (Princeton University) and Benjamin I. Page (Northwestern University)’s study found that the number of Americans for or against any idea has no impact on the likelihood that Congress will make it law.
>One thing that does have an influence? Money.
>While the opinions of the bottom 90% of income earners in America have a “statistically non-significant impact,” economic elites, business interests, and people who can afford lobbyists still carry major influence.
https://represent.us/americas-corruption-problem/
America is a republic only on paper. It's a de facto oligarchy.
I mean look at how TurboTax, Intuit, H&R Block have been able for decades to keep the IRS from doing our taxes for us. Literal rent seeking behavior and the only people it benefits are the tax filing companies. Literally everyone else in America loses. https://sunlightfoundation.com/2013/04/15/tax-preparers-lobb...
The biggest trick capitalism ever pulled is convincing people that it's not a system of government where whoever has the most money, rules. The plague of rampant regulatory capture just further proves it.
It always feels like there is some element that should exist-by-default in our economic system to organically oppose monopolistic behavior, without active government attention. Roughly this looks like consumer unions: the more monopolistic an organization, the more it looks like a governmental agency, and correspondingly the more power the public should have over it—putting a ceiling on the ability of private enterprises to extract value from the public.
This is a shame, because I think markets can be amazing engines for optimization. But unless we're going to work to make sure there are strong markets for a given good, we're not going to see much of that.
Minor nit - See's candies is a luxury good and shouldn't affect the average customer from becoming poorer.
Healthcare, hosing, education, etc. on the other hand...
Give the actual product didn’t change, just the pricing, it actively takes money away from ordinary people and gives it to a few. Would you consider Disneyland similarly a luxury? It’s sad how expensive it’s gotten to keep Wall Street happy, meanwhile it allows for rich kids to go but not poor. Same with baseball games. Same with literally everything. Raising prices to make more profit disproportionally hurts the poor, and makes them poorer.
* Rice, Buses: 'inferior goods', because as people get richer they shift their spending to other goods.
* Bread, Cars: 'normal goods', because as people get richer they spend more on them.
* Caviar, Sports Cars: 'luxury goods', a category of normal goods where as as people get richer they spend a much larger percentage of their income on them.
See's Candy is a high-end candy brand, and I would expect it to function as a luxury good here.
If a certain product has tons of loyal customers, it's creator/owner deserves all the wealth he gains off of it.
Unlike candies, housing is essential.
Edit: It's such a nice example of the first-world leftism: "those damn billionaires are stealing my... fancy candies".
I don’t know if See’s candies are expensive now, but they didn’t used to be. That’s my point. Same with going to the ball game. Same with Disneyland (or at least not at this level). Movies. Going out to eat. Etc.
> Keep raising prices until you can’t, but in the mean time, make people poorer
That's a primitive model employed by people that are unable to think long term and at scale. More than half of US population lived in poverty in 1900. You know what changed that? "Keep raising prices until you can’t" combined with competition.
I want good products to have higher prices - this ensures I'll get access to even better products at lower price in the long term.
There are dangerous exceptions of course, we learned what those are long time ago: essential goods and monopolized industries. Arguably, housing is both. Candies and "going out to eat" are neither.
I couldn't care less if some billionaire is becoming 10x wealthier if I'm also becoming wealthier at the same time. Complain about inequality all you want, but if I was born 100 years ago, my diet would likely be shit. Today and can eat the same (or even better) food than the richest man in the world. Think about it for a minute.
To use an extreme example, if every landlord in Manhattan was using Real Page where would you build your competing housing? Manhattan is already pretty densely developed and housing in the other boroughs involves a much longer commute for someone working in Manhattan.
Edit: Another point is that, unlike something like a web service, you can't collect all the customers. You could only steal as many customers as your buildings can hold. Meanwhile the landlords using Real Page are collecting higher rents and can squeeze you out of building additional property by bidding up the cost of the land you would have to build on.
In other businesses you have the very common occurrence that an old small/medium size business owner wants to sell his business and retire, but he's stuck because the actual value of his company is close to 0, and any new person is at best interested in the real estate or parts of the inventory. So the old person doesn't sell and the business continues to deteriorate until nothing is left. With real estate it is different, because there's always some old person sitting on it. You can't create it from nothing like you can any other asset.
See’s candy isn’t the only candy company, nor is candy a necessity.
Japan has many good and bad things about it. There is no utopia, and I’d rather live in the U.S., but I wish we had a bigger mix of harmony as a cultural North Star. Covid demonstrated to me over the past 3 years significant weaknesses of a individualist culture.
An interesting comparison is Saudi Arabia, which liberated itself from external rule just a few years prior to the discovery of its vast oil reserves (and just a few years after the realization that oil would fuel industry for the century to come).
Capitalism has lifted hundreds of millions out of poverty in the last century by essentially targeting inefficiencies.
But here we are worrying about price of high-end candies.
I don't know what the next "Big New Thing" will be, but I doubt it will have the same impact as computing/internet. I think things are just going to get pretty bleak for the lower classes as more and more of the world is consumed by oligopolies.
Historically you get uprisings and revolts when the lower classes are trampled. I don't even think that can happen anymore with even small police departments getting tanks and access to drag-net surveillance at global scale.
The internet was transformational because it (1) decreased communication friction by orders of magnitude & (2) enabled digital business operations, powered by computation instead of people.
And specifically, these were both things that applied to every business on the planet.
A lot of job roles disappeared as a result of that, but it made business much more efficient and scalable. And allowed the remaining employees to be more highly compensated (same_revenue / fewer_employees = more salary space).
Looking around for similar future potentials, I see 3.
1: Applied AI integrates itself into businesses (specifically, in finance, operations, and analytics) enabling another increase in efficiency by an order of magnitude
2: Remote working (and specifically international) allows use of a wider range of talent, at competitive salaries, which permits businesses to hire specific skillsets they previously lacked access to (didn't exist or unaffordable)
3: Driverless over-the-road freight vehicles increase shipping efficiency by an order of magnitude
That's completely false. Just look at all the convenience stores spread across the world. Or, if my neighbor sells widgets, I can still go into the business of selling widgets.
> The thing is, "the algorithm" should have very little to do with that sick feeling. The coldness of the interface and robotic voice certainly make for a stark contrast with the thing you are doing, but they aren't the cause. The moment you start thinking about someone's longtime home as something that can "align with strategy," and about pricing someone out of their longtime home as "an adjustment that would be more beneficial," you have morally lost. It doesn't really matter how you go about making that adjustment.
The tool and the training for the tool definitely matters, but the truth is, making business decisions about housing will necessarily hurt people in ways that are disproportionate to the amount of additional income a landlord gets.
This sucks for everyone, but especially for less mobile or financially-secure tenants. I don't think there's a great solution for the American rental system yet other than less profit-maximizing owners or schemes like HDB flats in Singapore.
Fundamentally, the solution is to allow much, much more building.
So far voters are not a fan. Perhaps that will change with the increasing rise of corporate ownership.
While I’m always uncomfortable with violent rhetoric, the very public antipathy around “rent-seeking parasites” does give me hope that in the future, fewer voters will see themselves as “temporarily embarrassed landlords”.
We can easily see this as millenials have gotten into owning homes themselves. People are quite good at tending to their own self interest.
Now, let's suppose somehow we build all over my neighborhood over the next three years and rent craters. Instead of paying, say, 1200 on my mortgage to own a place instead of 1000 in rent, I could now be paying 600 in rent vs. 1200 on a mortgage. I'm now in a bind where I'm losing money every month over renting the place next door and there's a good chance my property even when I pay it off is worth less than I've paid.
I'm certainly not against building, but if somehow every YIMBY dream came through for them near me, I've definitely just made a really terrible financial decision that's going to dramatically change the trajectory of my life. Moving to another city for a job is now borderline impossible if I'm tens or hundreds of thousands of dollars underwater on my mortgage, and couldn't rent the property for anything close to what I'm paying.
Like many fixes to societal ills, it's easy to look at the end result and see how it's better for most people, but it's likely to hurt a lot of people who made totally reasonable choices.
I think it was a reference to this famous quote:
> John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires. -- Ronald Wright, A Short History of Progress
Correction...voters are a fan of more housing being built (affordable housing even), just not in their neighborhoods where it will negatively impact their property values and status quo.
The only way out is forcing voters to accept housing being built in their neighborhood.
The government could force and pay for construction of massive numbers of condos/townhouses in/around large cities (say 20-40million). Sell them to first time home-owners for extremely cheap (say 200k) with all types of restrictions on it being owner occupied and only allowing the owner to recoup a certain % of appreciation after X numbers of years if sold (say 3% each year lived in).
I’m sure that’s problematic and a team of people smarter than me could come up with a much better system, but there are very tenable solutions with the ability to change laws/policies and a massive pocket-book.
The US used to give away large parcels of land to people just to move out west. So it’s not like there’s not precedence for helping citizens with real estate.
Nothing significant will be done in our lifetimes though, oh well.
Agree, and disagree. Distortions of the market rarely go as planned, so trying a massive intervention is likely to have a whole bunch of negative side effects. And I don't believe smarter people are more likely to be successful with their own attempts.
Keep it simple. Build more. Drop the zoning restrictions, reimagine the purpose of urban growth boundaries. Supply and demand actually does work.
And to those who may balk: Dense housing doesn't need to be cheap. If you think to yourself "Gosh these walls are thin", that should not be a given in a long-term investment like a multistory complex. High quality, somewhat private housing is possible!
While "any housing" is better than an extreme like homelessness, I align with those who think ever expanding suburbs is a big waste of concrete, infrastructure buildout and promotes the use of needless daily private transport.
I lament (rental) apartments being built all over my city's downtown, but I support increasing the density of living in urban areas.
The "problem" was that population growth kept up with supply - initially through an extremely high birth rate and then, when that collapsed, through extremely high immigration rates.
Given the high population growth and low availability of land the growth in housing stock has been pretty amazing. Both the quality and the quantity certainly blows the US and Europe out of the water.
There are various co-ops that exist in the US to buy things like apartment complexes that the tenants then take ownership in.
There are things such as Council housing in the UK.
There are various alternate reality types of systems that basically haven't been tried, or have only been tried in small numbers.
Once you bring in profit-maximizers into a larger, mostly free-market sector you tend the entire industry in the one direction of profit-maximizing (as the profit-maximizers can outbid the others on newly entering housing).
Exactly. That's not renting, and co-op owners aren't landlords unless they turn around and rent the unit out.
the burden of taking care of people who are less able to take care of themselves is not a burden that the government should place on certain individual people or individual companies, so rest of us can go on about our days happy that we don't have to think about it any more. If you want us to redistribute money to people so they don't need to move, the bite should equally come out of your and my income and bank accounts, not just landlords'. If you think that the govt should buy all this property so it can do a great job of being a landlord and tenants will be happier that way, get those laws passed. Till then, the fallback is not to simply punish rental property owners. (disclosure, I own property but I don't rent it out because I don't want the hassle, the money is not worth it)
Y'all see this rhetorical jump right? arciini made no mention of any action against landlords but to get out ahead of any possibility even as small as social-pressure against raising rents fsckboy has both escalated the framing language to "punishing" them and also shifted the frame from the plight of renters to the plight of rentiers.
"If you want us to redistribute money to people in East Palestine so they don't need to move, the bite should equally come out of your and my income and bank accounts, not just Norfolk Southern's."
So you're saying everyone should pay for an externality of a particular industry? Socialize the costs?
Deciding that the correct place for that burden is on landlords is a valid and consistent view. That this is part of the risk and responsibility incurred by the action of landlording. No one is forced to be a landlord and so in this view if you don't like that responsibility you simply don't landlord.
It's not "punishment" to reevaluate where we let burdens fall, and require that some roles now carry burdens that they were once free of. And if it is, shit, we punish lots of people for all kinds of things, why are landlords exempt.
A better car analogy would be the mandate of safety features such as back-up cameras that the purchaser pays for, but ultimately benefit others.
This is worse than I thought.
I don't think they do this on purpose; when I called one of the buildings I was interested in, their leasing agent was surprised I could even see the 'real price'...
A 42% increase in 'vacant but unavailable' sounds pretty significant, even if artificial...
https://www.thecity.nyc/2022/5/17/23108792/nyc-apartment-vac...
There is a very legitimate supply problem, and blaming landlords won't solve it. They only have the leverage they do because the government gave it to them. We could make the gov't back off if we wanted to, but by and large we don't seem to want to.
That still leaves landlords, but the only reason landlords have outsized power in the first place is that there's a massive housing deficit in every place in the US people actually want to live.
Which pushes priced yet higher, because demand increases.
I really hope the government intervenes. The situation is dire for renters across the country right now in a way I've never seen. Rent rising everywhere seemingly regardless of desirability, wage gains, or cost of living. Or I could hope for a housing crash, I guess, when they finally drive rent too high and nobody can afford it.
This is likely due to the suspension of student loan payments and will correct if/when these payments resume.
RealPage and Yardi dominate the industry with some of the worst software imaginable. The price fixing and competitiveness in the industry is a feature not a bug.
ActiveBuilding basically built thefacebook.com for residents where the sticky feature was online rent payment. They of course got bought by RealPage which continued to operate it as is for a long time with few improvements, but landlords were tied to the ecosystem and didn't really care about the resident experience as long as they could pay rent online and submit maintenance requests. Also who the F decided that they don't need spaces in Product names over there?! ActiveBuilding RealPage.
Rant over
The ideal here should be to cause the least harm. To everyone involved. Landlords should not be ruined but even more important should be the right of people to reasonable housing costs. Again, this is not a luxury... it's a basic human requirement and since it appears to be getting out of hand there needs to be a remedy. The only group powerful enough to provide that remedy, in our system, is the government.
There's no great mystery here. There just aren't enough housing units in the places people actually want to live, and local cities are keeping it that way.
[1]: http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
[0]: https://www.betradar.com/betting-services/live-odds-service/
So yeah, "you" can, if you're one of those AI SaaS companies.
The price collusion is greed/growing pains for prices being dynamic by default.
This is another social norm that is being discarded by modern society. In the past, you didn’t go to a store two days in a row and see different prices without a good reason.
It'd be easier to forward reporting by the WaPo or NYT that makes a credible case for price-fixing.
I told them this was unreasonable for the area, but they refused to budge on the price, offering a paltry $50 discount.
That apartment eventually got re-rented for $2700 according to StreetEasy as they couldn't find tenants at the price point they (or the "algorithm") wanted.
I recently crawled all the listings in my county that are hosted by marketing company Engrain, and the problem is there just aren't that many. The only buildings with a lot of vacancies are new ones that are still leasing up. https://observablehq.com/@jwb/survey-of-east-bay-apartment-v...
Side note: I doubt this is actually "AI". Probably some heuristics.
Price-fixing is not a right in the US. It's explicitly illegal.
We as citizens should be strongly opposed to anything that makes housing more expensive because it contributes to homelessness, which is much more expensive than just forcing landlords to actually compete with each other (you know, like the free market is supposed to).
The biggest threat to a competitive market isn't the government in the US. It's the accumulation of power by a small number of actors who control the majority of the supply side.
This conflicts with our moral sense (in part because there's nowhere you can go to opt out) so we backstop it with entitlement programs. But the premise is a least in principle fairly sound; not as evil as what you articulated.
It's super-scummy behavior and if it weren't "washed" through this software, would be blatantly illegal. Why do we allow these "loopholes" where a company exists to essentially help other companies directly break the law in spirit, but barely not in letter?
Seeing this article, too, along with a dozen other personal anecdotes (and seeing the early stages of blind-trust in AI), I'm realizing we're moving toward a point where over-trust in "what the computer says" is going to have material effects on civilization.
Ironically, the "Terminator Scenario," won't be what destroys us. Instead, it will be people's brains turning to mush due to over-reliance on AI/algos/etc. We'll simply hit a point where few if any people exist who understand the analog side of what the software is automating.
Prices raise because people are willing to pay that much for dwelling. People are willing to pay that much, because supply doesn't keep with demand.
## Why I don't consider this a case of price-fixing
Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view.
There's very strong incentive to defect from "optimal vacancy rate" and eat outsized profit compared to the rest of competition. Making building easier makes consolidation harder, as outsiders are now potential defectors as well. AFAIK we're not in monopoly situation (yet?) for rental properties.
OPEC engages in price fixing. It is unstable, as you say, but nobody would say "OPEC is a perfect example of the free market functioning exactly as it should, with no price fixing or market manipulation going on."
If RealPage were price fixing rather than simply facilitating price discovery, landlords would have no incentive pay for the service.
This is just... obviously wrong. If this were true, nobody would ever join a cartel, since membership is voluntary. All antitrust legislation and enforcement would be rendered entirely moot, because nobody would ever collude to fix prices.
If you need to get on the phone with RealPage every single morning and either adopt their suggested pricing or jump through beuracratic hoops to exclude yourself from doing so, that seems much more like fixing. They're not saying "here's the data, go about your day," they're saying "you are to charge tenants this much rent and you better have a good goddamned reason if you refuse."
Quoting FTC, price fixing is an agreement (written, verbal, or inferred from conduct) among competitors to raise, lower, maintain, or stabilize prices or price levels; Generally, the antitrust laws require that each company establish prices and other competitive terms on its own, without agreeing with a competitor.
It doesn't matter if we're in a monopoly situation, it doesn't matter if the agreement is effective or if many participants defect - if some participants agree to coordinate prices, that is prohibited and punishable.
This is untrue. The escalation would be to the property's management team, which is the same group which configured the tool to use the recommended pricing.
> If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required.
If I take a Playstation to the checkout counter at Walmart and say "Instead of $500, how about $450?", the person at the checkout counter doesn't have the authorization to change the price from the price enforced by the checkout system. They'd have to call over a manager and make the case as to why I should be able to buy it for $450 instead of the enforced price the system already set.
See sections 46 and 47 in the complaint:
46. RealPage and participating Lessors have provided one another with such mutual assurances, agreeing among themselves not to compete on price for the sale of multifamily residential real estate leases. They have effectuated their agreement through two mutually reinforcing mechanisms. First, participating Lessors have agreed to set prices using RealPage’s coordinated algorithmic pricing. Second, participating Lessors have agreed to stagger their lease renewal dates through RealPage, to avoid (otherwise natural) oversupplies in rental properties.
47. RealPage’s coordinated algorithmic pricing allows participating Lessors, in RealPage’s words, to “outsource [their] daily pricing and ongoing revenue oversight” to RealPage, with RealPage pricing participating Lessors’ “properties as if we [RealPage] own them ourselves”—that is, as if RealPage and its participating Lessors were operating as a monopolist.
The first approval is done by the Pricing Advisor (an employee of RealPage) and a second approval is done by a manager at the Lessor's office.
You still have to break up price fixing cartels like this. You can't just lean back and pretend "moar supply" will magically fix anything.
The cute comments ("moar supply") signify your ignorance on the various aspect of the housing market at large. And that is an unproductive comment that demonstrates your overall lack of understanding of the issue at hand.
This "cartel" is a symptom, not a cause. Nobody is price fixing sedans, are they? I wonder why. Oh, supply of hundreds of options and price points? Hmmmm....
A good example is a study of payday loans that tend to move upward due to price signals set by local lawsn
There's literally nothing that software could do to enhance their market power. The most you could do is help them to communicate about who the worst actors are, to try and level out the information asymmetry. But everyone still needs housing and there's still only so many units - someone is going to end up a tenant of the extractive landlords, whether we all know they're extractive or not. It's not like tenants of slumlords don't understand that that is their situation, it's poverty keeping them there, not a lack of market data.
Ah, so that's why YouTube content is mostly from the television companies that were powerful around the year 2000. And also why long distance telephone calls are the same price and most of the revenue is being captured by AT&T. And e-commerce, of course, is dominated by the same companies that ruled the malls in the 1990s.
I've noted this previously using Charles Perrow's description in Complex Organizations (1972, 1985), here:
<https://news.ycombinator.com/item?id=31254795>
The idea that technology is not socially or politically neutral, and specifically that it very often acts as a power multiplier, is widely understood, if not particularly accepted among HN's commentariat.
See Langdon Winner, "Do Artefacts Have Politics" (1980) <https://web.archive.org/web/20110626114826/https://innovate....>
Some HN discussion here: <https://news.ycombinator.com/item?id=9321090>
I agree that tech often acts as a power multiplier, but I think that's because it is typically deployed by those who have power and want more. That doesn't mean that contra-power uses are impossible, which is the claim that I think is pretty suspicious.
Most of the examples you've listed are just changing hats (and others aren't power structures - long distance rates are not a power structure). Amazon wasn't around in the age of malls? Okay, sure, but is "malls/department stores, but really big, and online" really a different arrangement than before, or the same thing with more centralization? I view that as a consolidation of power among broadly the same group of people (American corporations & investors).
This is a special case of, "technology solutions don't solve social problems." Technology improves and gets cheaper, no contest. That doesn't mean I can write software that will change my relationship to society anymore than I can write software that makes my computer levitate.
If you're interested in proving me wrong, it seems to me that the counterargument wouldn't be an example of technological change, but a theoretical framework that would enable you to analyze a social problem or power structure and come up with a piece of software that would radically alter the outcome, with results better than chance. Obviously it wouldn't be reasonable for me to demand a fully developed theoretical framework from you in a casual conversation, so I'm happy to concede I may be mistaken if presented with a convincing seed or intuition that framework could be crystalized from.
Alternatively, I'd absolutely concede I was wrong if presented with a convincing hypothetical piece of software that would radically change the relationship between tenants and landlords.
You don't have to do any of that of course, I'm not trying to move goalposts, I'm trying to point out where my argument might be vulnerable in the interest of good faith, and because I'd love to be wrong about this.
That's a very convenient way to make entirely unfalsifiable claims. Any contradictory evidence? Just more entirely unimportant exceptions.
> long distance rates are not a power structure
Ah, right, except for the fact that they were maintained by a monopoly. And that was broken up mainly due to advances in technology demonstrating that society would function just fine when it wasn't a monopoly, plus a moment history where people believed in regulation as useful.
> If you're interested in proving me wrong
Not particularly. I'm just interested in you not immediately shitting on the exploration of possibilities by making overblown, unevidenced claims and then voluminously handwaving away evidence to the contrary. Maybe let it breathe a bit.
E.g., we put together a rental listings platform that is free and comprehensive, so we have a lot of eyeballs for renters in the market. Could we organize them? Could we push for member discounts? Could we penalize landlords found to be using market manipulation software?