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Comment by fsargent | Hacker News Reader

If people are still renting the apartments, and the vacancy rates aren’t going up, (which in the United States, they’re not), then no, one company isn’t driving rents up.

We’re just not building enough housing.

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If vendors collude with each other (meaning there is no competition), which is obviously the case, no matter how many apartments are available for rent, then yes, one company IS driving rents up.

The article mentions Atlanta right at the beginning, saying vacancies are rising.

> RealPage's effects can be seen most noticeably in Atlanta, where software-based pricing affects more than 80% of rentals. Since 2016, rents in the city have grown by 80% — and higher vacancy rates have not driven prices down.

Meanwhile, in places building enough apartments, rents are dropping:

https://www.redfin.com/news/redfin-rental-report-april-2024/

It's possible that rents would be dropping more if this platform were not used by landlords. That isn't to say it should be illegal or is unethical, just to say that the fact that rents are dropping doesn't mean this platform isn't having an effect everywhere it's used.

I think it's entirely possible that it does have a small effect. A percentage point or two.

And a percentage point or two across thousands of people renting adds up to real money they are helping to skim. I don't see any downside to going after them.

That said, no, one company is not to blame for soaring rental prices across the US. It's mostly supply and demand.

Higher vacancies increase the utility of housing by reducing noise and crowding (quite a valuable quality for some), which counterintuitively may push back some against drops.

Contrary to popular belief, if you try to rob a bank but end up not having a net profit due to a low score and high costs, like if your getaway car breaks down, it’s still illegal. Also if you rob a bank but it ends up having less than average robbery losses for the year, the robbery is still illegal.

Collusion is criminal, it does not matter if you make money on it or not, or if “the market could bear the costs of our collusion” or “the collusion was only possible because of other market inefficiencies”

The problem with the "supply and demand" argument in this case is that the demand for apartments is essentially infinite. People absolutely NEED a place live, so it's not just a normal, rational transaction. Companies know that people will pay whatever they have to for a roof over their head, even though it means sacrificing their quality of life in other aspects (vacations, shows, etc).

Demand isn't just about need, it's also about quantity. If there are a million households who need a housing unit, need it so they're not on the street, but there are five million housing units in the area, housing will still be very cheap. Because 80% of the units will be empty even after everybody has one, and people are not going to pay anywhere near as much for a second one because they don't need it as much.

Whereas if there are a million households who need a housing unit and there are only 750,000 housing units, you've got a big problem. For which the solution is to build more units.

> If there are a million households who need a housing unit, need it so they're not on the street, but there are five million housing units in the area, housing will still be very cheap

This is only true if enough of those five million housing units are competing to get filled

If a single person or company owns all five million housing units, they can set the exact same, arbitrarily high price for all of those houses. Then it's a problem for the people who need houses: take it or leave it

But your scenario is rarely if ever the case. Especially when referring to new housing, because landlords and construction companies are typically different entities, so when the new construction is complete it goes for sale into the market and anybody has the opportunity to buy it.

Meanwhile buying up an unbounded amount of newly constructed housing only to leave it idle would be extremely unprofitable, because they would have to be paying the construction companies the existing market rate (i.e. the monopoly price) to keep someone else from getting it, but then couldn't rent it out and recover any of the money because that would increase supply and lower prices (or, to put it another way, no further renters can afford the monopoly price so their choice is a lower price or an empty unit).

Or, you know, if the latter isn't happening, you find some way of allocating them that isn't an absolute utter unproductive drain on the economy. There are lots of finite things in life for which there exist many different allocation strategies that have nothing to do with people with a GED screaming "supply and demand" and "socialism".

The illegality of rental companies colluding is not negated by a lack of supply.

Next HN is going to argue you can't actually war profiteer since the fact that there is a war is driving up prices too.

It’s basic economics that a monopoly can charge more than firms in a competitive market. In the presence of competition, prices will be closer to cost. For a monopoly, demand still slopes downward as they raise the price, but they can set the price higher.

Collusion allows firms to get somewhat closer to the monopoly price.

I don’t how much this software really does to enable collusion, though? It seems like some landlords might defect if they have too many vacancies?

It gives the property management insight into rates charged for similarly sized and accommodated properties within their area. It starts as a means to compete in a market where rates aren't posted on the walls. Very quickly as the software becomes industry standard the dynamic reverses, and multi-property owners use it as a form of data-washing, knowing their competitors use the same software, as a means of price fixing without "speaking" to one another.

This part of RealPage's offerings is a commercial price fixing collusion tool, plain and simple.

- Disclosure: I formerly wrote software for and was employed by RealPage, though not on this specific product.

Housing isn't something you buy off of a shelf if it's worth the price. Living somewhere is a requirement. You must pay.

> We’re just not building enough housing.

Alternatively, we're letting too many people in. Land and resources are finite.

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