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munificent
mattgreenrocks
Gotta love how capital gets all high and mighty about unions, while getting repeatedly caught with various forms of collusion, such as the Big Tech salary collusion a decade ago or cartoon-villain-bad levels of price fixing as we see here. Basically, it boils down to, "do as I say, not as I do."
Is it possible for the suit to result in charges brought against all users of RealPage? They are active participants, after all.
wwweston
> Basically, it boils down to, "do as I say, not as I do."
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.
mattgreenrocks
This is really insightful, and applies to a lot of things.
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.
nostromo
I think it boils down to, “different people have different opinions, much to the chagrin of internet commentators.”
d0gsg0w00f
Well, cartels aren't capitalism.
Capitalism would be someone coming in and realizing the prices are inflated and undercut the rent prices while still being profitable.
colpabar
Okay, if that’s the case - why isn’t that happening, and what should be done to make it happen?
traverseda
Land is pretty much the definitive natural monopoly. If you want land rights you're going to end up with monopolies formed around the use of land and natural resources.
JoeJonathan
How would that work in a real estate market? How could you convince landlords to lower prices?
ahoy
How convenient it is that, whenever capitalism has a negative effect, people rush to say "oh but its not real capitalism, they're doing it wrong. That would never happen"
CPLX
Capitalism doesn't just happen. The natural state of nature is cartels, that's what markets will trend towards without government regulation.
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.
try_the_bass
No, that's "free market economics", which is slightly different.
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.
wwweston
"Capitalism" can be a lot of things, including things which privilege capital without regard to market freedom for labor or consumer.
Cartels certainly aren't free markets. To keep those you need policy which keeps them that way.
JohnFen
That's more of a free market thing. "Free market" and "capitalism" are distinct concepts that can, but don't have to, coexist.
gwright
I fail to see why unions need to be brought in to this issue. Not every problem needs to be framed in the form of class struggle. Exactly what sort of "union" would represent tenants? It just seems like a unhelpful way to discuss this particular issue.
skrtskrt
yeah why, when discussing large powerful groups of capital owners colluding to screw the working class, why would we discuss the most successful tool at stopping them: groups of working class people large enough to claw back a tiny amount of power?
8note
Worker unions have provided housing to their members before.
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
idopmstuff
I was all ready to come into the comments with "Sure this is annoying, but it's a symptom of the underlying problem of a lack of housing caused by poor housing policy." Then I got to this paragraph, and yeah, no, this just clearly price fixing. You have to convince your software provider to let you charge a price that's different than what they want you to charge? That is truly bananas.
andrewstuart2
That's because you're not so much convincing the software provider as you are the cartel who wants prices to rise as effectively as possible.
Aunche
If you take the plaintiff's allegations at face value, of course the defendant is going to sound guilty. The reason why I'm skeptical is because "cartel as a service" doesn't make any sense as a business model. Realpage doesn't gain anything from creating a cartel because they don't own the homes. They advertise that they maximize profits for landlords. If they are indeed price fixing, they aren't fulfilling their promise to their customers.
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.
idopmstuff
> If they are indeed price fixing, they aren't fulfilling their promise to their customers.
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.
munificent
In this case, we would be taking the defendants own words at face value, which seems reasonable to me.
> 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.
paulgb
I thought maybe the article was cutting out context from the source, so I read the source[1], and not only was the article not taking it out of context, there are even more damning quotes:
> 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...
jollyllama
I think landlords have already been doing this even before software existed.
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.
cjbgkagh
I’ve heard from non-authorities sources that loans for the comercial properties have covenants that would severely financially punish the landlord for lowering the rent. Enough of these restrictions in a single location would have a monopolistic effect on pricing paid for by landlords who now have to carry these loans without tenants. Usually it’s expensive to distort a market enough to maintain monopoly pricing but not if you can get someone else that is optimistic, naive, or desperate to pay for it.
onlyrealcuzzo
IIUC, this is an expansionary accounting trick.
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.
VHRanger
Having rented commercial properties, the way around this is to agree to the lease rent, but then negotiate a bunch of rent vacations, financed renovations, etc. which even out to having a much lower lease.
The commercial landlord financial infrastructure is broken, but gameable.
Also, a land value tax would fix this (and many other real estate market distortions)
ramraj07
Doesn’t matter, now they are openly colluding through a company. A competent government can create a RICO equivalent and penalize these animals, if it wanted to.
pixl97
Government officials whose campaigns are funded by the potential members of the RICO suit are rarely ones to push for said suit.
Scoundreller
A lot of jurisdictions give property tax rebates on vacant property. Mine has finally removed that and now penalizes it.
Smart move: vacant properties are devoid of voters.
testTED
[flagged]
jonathankoren
There’s two different types of price collusion, and only one is illegal. The first is using public signals (ie looking at competitors prices) and setting yours to match. This is perfectly acceptable, and is usually unspokenly enforced by tit-for-tat strategies.
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.
DaveExeter
>This is perfectly acceptable
Not "perfectly". I think some companies have gotten into trouble doing this.
idopmstuff
What's described here is significantly worse, in that it's not just landlords deciding to leave things vacant instead of lowering lease prices, it's a third party software that's coming in and telling a large number of landlords across a market what they're allowed to charge.
JamesBarney
There is nothing wrong with keeping a unit empty to charge more money.
There is something very wrong with a software based price fixing cartel.
peoplearepeople
> await approval
Sure seems like RealPage is price fixing then
vel0city
The approval wouldn't be from RealPage, it would be from that employee's supervisor.
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.
solarmist
No, the article is very clear. There is approvals team that that has to press the button in addition to management. To slow down/increase friction the process even more.
ROTMetro
First, how do you not have a 'you're posting too fast' cooldown with all the posts you are making on this thread?
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.
bitwize
> This is like calling your pyramid scheme "Pyramidal Inc.".
(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.
Ekaros
I might accept information sharing of rents and price levels. And someone guessing what market will bear.
But having someone approve pricing? That is clearly something worth prosecuting and heavily fining for.
arrosenberg
Honestly. The CEO and General Counsel? Straight to jail for economic crimes. They're stealing from the regular people.
azinman2
I worry about time passing for any existing stable industry where MBAs want to come in and “exploit inefficiencies.” It reminds me of Warren Buffet noticing how he can keep raising the price of See’s candies without losing customers. “Look at all that price elasticity l!” Meanwhile ordinary people become poorer.
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.
cjbgkagh
It’s an erosion of good will, lots of companies go through build vs exploit cycles where they build up a brand with marketing, good quality, and value. Then they exploit it by cutting any of those. As it’s difficult to know the maximally profitable steady state it’s much easier to slowly oscillate between the two taking measurements on the way. A savvy consumer can pay attention to this and specifically try to buy from companies in a build phase. Often less savvy consumers get stuck with brand loyalty and they get exploited. Unless of course the company is a monopoly or oligopoly at which point it’s most profitable to stay in the exploit phase. It should be noted that some times prices in a build phase are not long term sustainable without a subsequent exploit phase.
Karellen
Cory Doctorow calls this "Enshittification":
> 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.
cjbgkagh
You make a good point, I do think having a dysfunctional financial industry makes the build -> exploit -> sell/dump such an attractive option that it would be crazy not to chose it. The problem is that people are buying these companies at overvalued prices. Probably a side effect of low interest rates among other things. In theory those who keep buying overvalued companies would long term lose money and will be less able to keep doing so. That doesn't work with negative real interest rates.
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.
pixl97
>try to buy from companies in a build phase.
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.
solarmist
I think erosion is a good word for this.
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.
mrexroad
> 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.
solarmist
Sure, you’re explaining the mechanism of what I’m talking about.
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.
tomrod
> I think erosion is a good word for this.
The term has a rich history under the phrase: "consumer surplus."
solarmist
Or “poor(er) people having some money.”
RobotToaster
>How do we deal with erosion in other situations?
We drop rocks on it?
tracker1
I would not advocate for such a thing... but I'm honestly surprised that there haven't been attempts on the lives of executives/management/boards of companies like in TFA... I mean the whole "one bad day" is all it takes. People/society seems to be far more resilient than people give credit for... of course, this is countered by the massive homeless population. Maybe we're just far more docile.
It's hard to imagine this being tolerated a century or more ago.
brundolf
Plant grass [roots]
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loldk
[dead]
coryrc
"Consumer surplus" is the term you're looking for. Minimizing consumer surplus leaves you vulnerable to undercutting by competitors.
There are plenty of competitors to See's candies. Just buy from them.
marcosdumay
> I don’t know what could practically be done about all of this
Make your government ensure market competition, and stop it from harming said competition an declaring winners.
ethbr0
This.
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
zopa
> The problem is not that companies are able to increase prices and improve their margins. That's good!
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.
tracker1
Yeah... I think that the FTC needs to get back into trust busting a lot more frequently. I've been saying for over a decade, and amplified since covid supply issues, that the FDA should absolutely require dual sourcing and at least 50% domestic production. Many industries should require at least some percentage of domestic production, just for security concerns regarding supply.
llampx
I think the various government agencies, but especially the FTC, have taken the position that its America vs the world, and thus have looked the other way as tech giants have engaged in anti-competitive and consumer hostile behavior that earlier would have resulted in at least raps on the wrist, if not more (MS antitrust suit).
Now the position seems to be to let them do whatever they want and shield them from other governments and competition if necessary.
ChickenNugger
That doesn't work anymore.
>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.
sixo
The need to actively defend competitiveness from erosion seems like a vulnerability in the capitalist system. Anticompetitive behavior is a natural tendency in the system; it is advantageous for everybody all the time to be doing as much of it as they can get away with, and the gov has to actively exercise energy to determine when it gets too bad and needs to be reversed. Governments are fundamentally not very good at holding a line like this, they get tired... they greatly prefer to let things just play out on their own. They prefer to have a private company managing e.g. a local utility monopoly rather than do it themselves.
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.
wpietri
Yeah, private equity is a plague on humanity. I've heard so many stories of industries made worse for workers and customers just so some dicks can extract a steady stream of cash along the way to destroying everything.
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.
mbesto
> can keep raising the price of See’s candies without losing customers. “Look at all that price elasticity l!” Meanwhile ordinary people become poorer.
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...
azinman2
Personally I don’t consider it a luxury good. It’s candy, not bread, but it’s there for the masses. It’s just an example being done to literally everything.
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.
jefftk
A 'luxury good' in the technical sense is one where when your income goes up your spending on that good goes up disproportionately. So:
* 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.
carlosjobim
Of course Disneyland is a luxury. Do you want to delete the word luxury from the human vocabulary? And for what?
cody_coconuts
I think one of the problems is that people will treat these as the same. They follow Buffet's lead because the end goal is money. Everything else is a number on a spreadsheet
hbrn
Huh? Are you really saying expensive candies are causing wealth inequality?
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".
azinman2
But yet here the same principal is being applied to housing. Keep raising prices until you can’t, but in the mean time, make people poorer.
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.
hbrn
Same principle, different markets, different outcomes.
> 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.
abfan1127
unaltered housing markets have the same market signals of candy markets. If housing is "artificially expensive", others can build new housing and collect all of the customers. In this instance, find "Real Page" communities and build similar housing next to them and offer 5-10% less than Real Page and take all of the renters. The big problem in housing is the NIMBY and regulations surrounding it.
AlexandrB
You would be right if housing location (mostly) didn't matter. But people generally want housing close to where they work and "location" is not a fungible input.
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.
carlosjobim
Real estate is the only asset that is absolutely limited in quantity. With all other businesses you can compete if you are smart and resourceful, with real estate you have to first pay those who are sitting on the land. And they all demand a payout like winning the lottery to let go.
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.
kortilla
That’s working as intended. If you expand the profit margin you just expose yourself to competitors.
See’s candy isn’t the only candy company, nor is candy a necessity.
arciini
Housing as a for-profit business kinda makes sense, but I think the main takeaway of the article is this:
> 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.
nordsieck
> 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.
fwlr
“So far voters are not a fan.”
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”.
rootusrootus
I don't think it's that many people aspire to be a landlord. It's just that homeowners have put a large amount of their net worth into real estate and declaring open season on new building directly hurts them.
We can easily see this as millenials have gotten into owning homes themselves. People are quite good at tending to their own self interest.
crooked-v
For more, the more infuriating rhetoric is the supposedly-YIMBY types who act like property developers are evil scum for constructing and selling buildings at anything other than a loss.
j_walter
> So far voters are not a fan.
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.
medvezhenok
In other words, it's a classical prisoner's dilemma.
The only way out is forcing voters to accept housing being built in their neighborhood.
firstplacelast
There are tons of things America could do for the rental and home-ownership market, but we won’t because people will scream that it’s unfair and it will hurt the upper class and existing home owners.
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.
rootusrootus
> I’m sure that’s problematic and a team of people smarter than me could come up with a much better system
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.
unethical_ban
Build more relatively dense housing.
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.
HDThoreaun
Japan style zoning and LVT completely solves the problem. Maybe throw in a vacancy tax in some areas to keep the progressives happy and environmental standards deregulation for conservatives.
shuckles
The HDB system's outcomes aren't great if not paired with abundant supply. Singapore market rents are growing fast, HDBs have all sorts of unsavory (to Americans) queueing and prioritization rules, and there are plenty of rent seeking HDB owners who sublet their flats at high prices.
pydry
The whole point of the HDB system was to streamline and standardize the creation of decent quality housing. It worked spectacularly at creating abundant supply. Compared to the 1950s the supply has taken off like a rocket.
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.
shuckles
I don’t think Singapore has run out of (re-)developable land. It has lots of low rise homes that have very low land value tax assessments. In any case, I agree their current situation is better than ours, but my point that the HDB model cannot solve housing costs without abundant supply stands.
causalmodels
IMO the ethnic quotas would be the most unsavory aspects to an American audience.
notahacker
Suspect "virtually everyone lives in government housing projects" would be an even harder sell...
shuckles
The various preferences for heterosexual, married couples with kids wouldn’t be popular either.
anonymouskimmer
> 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.
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).
98codes
> to buy things
Exactly. That's not renting, and co-op owners aren't landlords unless they turn around and rent the unit out.
anonymouskimmer
Yeah, but it's an ownership alternative for people who are otherwise stuck being long-term renters. And for long-term renters I think ownership is the better alternative in many cases.
fsckboy
> but especially for less mobile or [less] financially-secure tenants
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)
Avshalom
>punish rental property owners
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.
rootusrootus
It's not that big a rhetorical jump, though, is it? There's already a lot of anti-landlord rhetoric in this discussion, and historically it heads that way every time.
anonymouskimmer
> 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'.
So you're saying everyone should pay for an externality of a particular industry? Socialize the costs?
giraffe_lady
This conclusion hinges on viewing landlord as a range of human identity, like mother or craftsman. Landlords aren't a type of people, it's an activity, an economic relationship.
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.
ROTMetro
Car companies shouldn't be required to add safety features. If the market wants it car companies will add them. Seatbelts should be an add on expense like they were in the 1960s. Get the government out of the business of looking after citizens!
anonymouskimmer
I think you're getting downvoted because the analogy doesn't quite parallel, as car purchasers are indeed paying for those seatbelts in the car price.
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.
newaccount74
Holy shit, how bad is that? People have been saying that market demand is the reason for rising rents, but in reality it's just landlords colluding to fix prices and leaving units empty to create artificial scarcity?
This is worse than I thought.
denimnerd42
They’ve been doing this manually with NYC storefronts forever. Now the automation exists (and has for at least 10 years) to do it globally. Yikes. i say at least 10 years as that’s the last time I rented. My apartment definitely used this software then and realpage hq is just across the street.
jareklupinski
if you search nybits.com (i think the last nyc apartment aggregator that sorts by date), you can see a daily flood of realpage-adminstered buildings shifting their units' prices up or down a few dollars every day
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'...
HDThoreaun
NYC vacancy rate is currently 4.5%, less than 1% above all time lows. Yes, artificial vacancy exists, especially in the ultra luxury market, but the data seems to show the extent is overblown.
jareklupinski
> More than 353,000 units were vacant but unavailable in 2021, up from 248,000 in 2017.
A 42% increase in 'vacant but unavailable' sounds pretty significant, even if artificial...
https://www.thecity.nyc/2022/5/17/23108792/nyc-apartment-vac...
rootusrootus
It's not just landlords, no. Some people want to force urbanization, so the government creates urban growth boundaries to limit sprawl. But then many of the people inside the boundary don't want high density housing near them, so they support zoning to keep it away. And mostly I don't think landlords are the ones leaving units empty -- it's investment groups that don't want to have tenants in the first place, they don't want to be landlords, they just want an asset that grows in value.
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.
crooked-v
With investment groups, I've seen a few convincing theories that most of the mass investment group housing purchases were a result of the zero interest rate for an extended period and the effect of that on other investments, and that big investors are likely to try and divest themselves of all those houses over time now that interest rates are back up all at once.
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.
anonymouskimmer
It's both, not an either/or.
vanilla_nut
And housing prices are spiking... because more people, not to mention corporations, see a market opportunity to profit from skyrocketing rents.
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.
bequanna
The primary reason behind rent increases is the sudden, artificial increase in the number of households.
This is likely due to the suspension of student loan payments and will correct if/when these payments resume.
shaaaaawn
This post hits close to home and could not be more accurate satire of the pains of property management. I spent a number of years building a competitor to RealPage's Resident Portal, ActiveBuilding (shoutout https://henrihome.com).
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
gaoshan
When rent gets like this (very high and controlled by a cartel as appears to be the case here) then there needs to be a remedy and the free market isn't going to be it. If the subject were some luxury good that was being impacted it would be of much less concern but this is housing. It's a fundamental human necessity and it's being manipulated.
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.
crooked-v
The remedy would be taking every city over a certain population, slam dunking local restrictive zoning and permitting straight into the trash, and replacing it with permissive "shall issue" zoning at the state or national level, in the style of Japan [1].
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
lotsoweiners
So should I just take my valuable but older real estate and have it leveled to rebuild similar amount of units but now luxury versions for much higher rent or sell to future land developers?
bogwog
I wonder if there are other industries engaging in this kind of price fixing scheme under the guise of "AI SaaS"?
notahacker
I suspect there's plenty providing market value estimates based on what other customers are pricing at, but the computerised voice begging people not to price below what the algorithm says and requirements for property managers to seek "approval" to vary their own prices are unusually blatant...
gobengo
look into the software your HR dept uses to know how much to pay you
Spivak
If you want a searchable term they’re called “compensation management.”
matsemann
In sports betting, you can buy a service that tells you what you should set your odds at [0], in order to match the market. Since hundreds of betting sites buy from the same company, they quickly converge on some set price.
[0]: https://www.betradar.com/betting-services/live-odds-service/
jker
And I thought I couldn’t hate sports betting any more than I already did. The ghost of Walter Annenberg is still haunting that slimy industry.
cobertos
The parking lots owned by an entertainment company in the large city near where I live (Detroit) prices all their parking lots dynamically. There's a TV at each unmanned lot with a different price dependent on the distance from the event (different venues at different distances) and depending on event and time. Seems made to extract as much as absolutely possible.
bongobingo1
Could you leverage it to make money?
anonymouskimmer
This is exactly what RealPage is doing. It's asking rental companies to increase prices. It's then turning around and marketing those percentage increases as a reason to use its software.
So yeah, "you" can, if you're one of those AI SaaS companies.
xwdv
Of course. When other landlords are jacking up the rental prices in price fixing schemes you can undercut them with more reasonable profit margins and steal more business.
notahacker
This is a little difficult if you don't own rows of empty houses though...
Animats
Sellers hate a free market where they have to compete on price. They don't want to live in fear of the other guy cutting their price and stealing their market share. You need a monopoly to win. That's the whole premise of Thiel's "Zero to One", and indeed, the VC community. YCombinator would never fund something that had to compete on price, unless there was some huge price advantage possible.
solarmist
A 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.
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.
saulpw
I go to the grocery store multiple times a week and see different prices for things I buy. They are constantly changing prices, with sales and offers and 2-for-1. I know this is to confuse me into not knowing what the "real" price of a good is, so that when I run out of ketchup I'm somehow fine paying $8 for a bottle.
solarmist
Yup. That is another example of this exact same thing. Probably the more common one.
none_to_remain
Inflation is not a new phenomenon
solarmist
It’s not, but they way we dealt with it has changed.
neilv
The style of this article isn't quite something that I'd want to forward to my state AG's office.
It'd be easier to forward reporting by the WaPo or NYT that makes a credible case for price-fixing.
makestuff
I check my NYC apartment website at least 2-3x per week since my renewal is coming up soon. The variance between pricing is insane. There is a 2k delta between 1br apartments on the SAME FLOOR, and the cheaper one is the better layout. They change every week though by hundreds of dollars. It makes absolutely zero sense to me.
hn_20591249
I got a rental raise for a 1 bedroom in Bushwick from $2700 to $3500.
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.
HDThoreaun
Many people are willing to pay more to not move, especially if they're in a walk up. Forcing returning tenants to pay more seems like one of the first moves landlords would try.
jeffbee
You know, there just aren't that many vacancies. If you want to break this cartel you need inventory.
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...
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> Specifically, every morning, RealPage provides participating Lessors with recommended price levels. ... If Lessors wish to diverge from the “approved pricing” they must submit reasoning for doing so and await approval. ... But RealPage emphasizes the need for discipline among participating Lessors and urges them that for its coordinated algorithmic pricing to be the most successful in increasing rents, participating Lessors must adopt RealPage’s pricing at least 80% of the time.
It's hard to imagine a clearer, more blatant description of cartel price fixing.
This is like calling your pyramid scheme "Pyramidal Inc.".