I think when they take the step of requiring subscribers to let them set prices, they are clearly violating the law. I’m skeptical that analysis reports telling landlords to raise rent are illegal, but writing in the contract that you have to follow the rules of the association is obvious collusion/cartel behavior.
I worked for a company that started using YieldStar back in 2006 and at least back then there was no contractual requirement to use the recommended prices. RealPage did heavily push the idea that you needed to work within YieldStar at all times. If a manager disagreed with a recommended price, our in-house revenue management would work with the manager to see if there is a configuration error in YieldStar (wrong amenities, wrong unit type, wrong target vacancy, etc). If there isn't a configuration error, then the recommended price would usually stand.
Yep, on one level it could just be automating the task of scanning Zillow and other sites and seeing what other landlords are asking. Any landlord is going to be doing that to some degree.
But the price-fixing amongst "competing" landlords is where it goes wrong.
Not that that doesn't make it worse, but also gathering the pricing data of an entire customer base of landlords and selling them analysis back is, on the face of it, just collusion as a service
> I’m skeptical that analysis reports telling landlords to raise rent are illegal, but writing in the contract that you have to follow the rules of the association is obvious collusion/cartel behavior.
Very seldom collusion is so blatant to be written in contracts. "Reports" and "recommendations" and "market color" are well established ways for competitors to communicate and coordinate illegally. Without additional evidence it would be difficult to build a case from that only, but large conspiracies leave large traces. The FBI will find something, if the conspiracy existed.
I appreciate that this investigation/raid is being conducted without becoming a major political talking point. Refreshing to see the government simply doing its job.
the whole real page situation irks me to no end. As if being a landlord wasn’t easy enough just milking people they needed even more money by colluding? It’s just obnoxious and I hope it gets the book thrown at it (and its corporate officers, but that might be too much to ask)
> As if being a landlord wasn’t easy enough just milking people they needed even more money by colluding?
"It's not enough for them to make a lot of money, they need to make ALL the money"
(James Stephanie Sterling pretty much whenever a triple-A game company does something shady)
We just had a Bloomsburg story earlier showing how fast food companies are using apps and gathering data to make sure they don't "leave money on the table" by using differential pricing.
It's incredibly easy, almost every landlord I've ever had did it in addition to a normal full-time job, and spent maybe a few hours a week on it. One didn't even live in the same country as the property. Of course it is risky, as you might get a bad tenant and have to spend money getting rid of them, but risky is not the same as hard.
So this is a fairly recent development: an effective cartel when all the players use the same software that spits out the same numbers. The defense is that they're acting independently and some can choose to use the software or not but that doesn't stand up to reality
Unfettered markets create monopoloies and oligopolies.
Housing isn't like other goods. If you don't want to buy an air fryer or can't because of price or supply, that's OK. You won't starve. But people need housing and we've built our economy entirely on ever-increasing housing prices.
This is a Ponzi scheme. The next generation has to work 3 times as hard or long to pay for your house to get that pricing increase. It's quite literally just theft from the next generation. Except it's worse than that because that threat is backed by state violence: evictions and homelessness.
We are quite literally choosing to kill people by witholding a basic human need: shelter.
Saying "my software said to do x" isn't a defense when you are accused of x. In fact, it may be seen as negligent or systemic, both of which are bad places to be. I'm not sure where people think they can get off the hook for criminal behavior because they outsourced pulling the trigger.
This is only true to some degree though. People can (and do) move to other areas of the country when cost of living becomes too expensive. They buy land and build on it themselves. It's not like there is a fixed housing stock and a fixed set of players has control over it (although it can be close to that in specific geographic areas, ie cities).
this has become less of an option though because pretty much all semi-decent job markets are really frothy now.
one could theoretically maybe move to the barren wilderness of Nevada or Alaska or somewhere else desolate but given the lack of services, job, etc. it's not very practical. WFH didn't really lower home prices in the Bay, but it did make a bunch of attractive rural towns really expensive.
Health care has a similar provider that tells insurances how much they should pay for out of network providers. We really need to reduce the data that entities can hold. There is way too much power in having so much data.
We've moved well beyond the traditional monopoly like Standard Oil. We moved onto conglomerates: about everything you buy comes from like ~8 conglomerates. We then recognized the user of market power for an effective monopoly (eg Paramount [1]).
So what we have now is a whole bunch of landlords who largely all use the same software. That doesn't sound illegal. Now if it happens to spit out the same results for all the users, that's one thing (and problematic all on it's own). But the allegation here is that landlords bought into and use the software knowing this would be the outcome.
This is just an evolution of the old cartel of 10 or so CEOs scheming to fix prices in a dark cigar-filled room except now companies attempt to remove their own responsibility by waving their hands at The Algorithm [tm].
The fundamental problem here is investment cash flows eclipsing operational cash flows. This invalidates basic economics of supply and demand price equilibrium. In this case, it means that the landlords can restrict supply without losses.
Heh, on Twitter, I was arguing against someone who thought that a corporation buying up apts and renting them out would result in lower rents. C'mon really?
I worked at a bank, in equities. There were Ethics and similar online courses every week, with exams. We just shared exam answers in our group chat. With that, blindly clicking through the course and clicking the right answers was ~10 minutes.
Yeah, seems like there's a majority at the top of the ladder who want to pretend all this stuff is naive meanderings of capitalism and not a concerted effort to pull up the latter of prosocialism that worked for many decades until black people got equal rights.
Readit News
But the price-fixing amongst "competing" landlords is where it goes wrong.
I would bet they're spreading the empty units around too, so no landlord ends up with all the empty ones.
Very seldom collusion is so blatant to be written in contracts. "Reports" and "recommendations" and "market color" are well established ways for competitors to communicate and coordinate illegally. Without additional evidence it would be difficult to build a case from that only, but large conspiracies leave large traces. The FBI will find something, if the conspiracy existed.
Pricing information is public, but inventory is typically not, at least in this context.
A cabal deliberately keeping supply down to drive prices up in a particular region seems like the real issue.
Dead Comment
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"It's not enough for them to make a lot of money, they need to make ALL the money" (James Stephanie Sterling pretty much whenever a triple-A game company does something shady)
Deleted Comment
Unfettered markets create monopoloies and oligopolies.
Housing isn't like other goods. If you don't want to buy an air fryer or can't because of price or supply, that's OK. You won't starve. But people need housing and we've built our economy entirely on ever-increasing housing prices.
This is a Ponzi scheme. The next generation has to work 3 times as hard or long to pay for your house to get that pricing increase. It's quite literally just theft from the next generation. Except it's worse than that because that threat is backed by state violence: evictions and homelessness.
We are quite literally choosing to kill people by witholding a basic human need: shelter.
Saying "my software said to do x" isn't a defense when you are accused of x. In fact, it may be seen as negligent or systemic, both of which are bad places to be. I'm not sure where people think they can get off the hook for criminal behavior because they outsourced pulling the trigger.
one could theoretically maybe move to the barren wilderness of Nevada or Alaska or somewhere else desolate but given the lack of services, job, etc. it's not very practical. WFH didn't really lower home prices in the Bay, but it did make a bunch of attractive rural towns really expensive.
Or, do, and thereby point out that the problem is systemic, to a culture too enmeshed in the system to understand critique.
So either way. Do what you were gonna do.
Rental markets aren't "monopoloies" or "oligopolies" by any stretch of the imagination.
They’re also a necessary expense. It is the last thing a person can choose not to spend money on.
So what we have now is a whole bunch of landlords who largely all use the same software. That doesn't sound illegal. Now if it happens to spit out the same results for all the users, that's one thing (and problematic all on it's own). But the allegation here is that landlords bought into and use the software knowing this would be the outcome.
This is just an evolution of the old cartel of 10 or so CEOs scheming to fix prices in a dark cigar-filled room except now companies attempt to remove their own responsibility by waving their hands at The Algorithm [tm].
[1]: https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....
2. the propublica article claims that realpage increases overall revenue by renting out less units.
From an economics standpoint, if you rent out 10+ units, having them 100% rented would also indicate that you are leaving money on the table.
Maybe there could be a fine/tax for units vacant over 6 consecutive months?
I wonder if VC's or people with Finance background are required to take Ethics classes.
https://cortland.com/