DOJ will examine whether RealPage helped landlords coordinate rent increases

https://www.propublica.org/article/yieldstar-realpage-rent-doj-investigation-antitrust

by RadixDLT • 4 years ago

194 123 4 years ago

anonym29• 4 years ago

Hmmmm... I wonder whether they will find any conclusive evidence that the platform which promises to help landlords extract every penny possible from their properties, using data from surrounding properties, that was being used by practically every major apartment complex, was possibly being used to raise rents... and whether this highly complex product with their proprietary algorithm could've had a feedback loop on it's own raised prices. Such a difficult case to figure out... /s

SSchick2• 4 years ago

Collusion / price fixing as a service.

I'm sure a decent chunk of HN's population has lived or lives in properties that are or were using RealPage.

Rant/Anecdote ahead:

We have recently decided to rent from a house from a private landlord after equity (a RealPage customer), "offered" us a 15% rent hike which they considered "reasonable" after massively cutting staff, service, security & amenities during covid. Practically every other building in the area (downtown Redmond, WA) has increased prices in unison so there is basically 0 competition.

These companies have turned areas they operate into upscale meat grinders that lure you with a "welcome" price only to systematically hike up your rent way beyond inflation. To slowly push you out if your salary doesn't grow faster to equal to their hikes.

Many of our friends have similar experiences.

Imo corporate landlords need to be heavily regulated and need to be broken up.

bombcar4• 4 years ago

Corporate landlords math out things and only do it as long as it’s profitable.

Private single-family landlords are often content renting as long as they get more than the mortgage. And if you’re a good tenant they often don’t bother checking comps at all until they have to rent it again.

dnissley• 4 years ago

I've found they're also far more likely to be absentee, and far more likely to discriminate on the basis of whoever happened to burn them in the past. They're also more volatile -- many are new to landlording and if it's not working out and they get a good offer they'll just sell meaning you've got to move.

blululu• 4 years ago

For a large operation it is complicated. The profit maximizing strategy starts to become more entwined with interest rates and taking out loans with properties as collateral. The price of your rent can be higher than the market rates on housing because housing is more or less a byproduct of a financial services scheme.

HDThoreaun2• 4 years ago

It’s really just supply and demand. There aren’t enough homes and landlords know it. If there are 2 families for every home you’re gonna have a bad time, no way around it. Only solution is building more.

lotsofpulp4• 4 years ago

In the case of housing, the tight timeframes for buyers and the low opportunity costs for sellers do not allow for a “fair” playing field.

If sellers collude, they can hold out for a few months or even a year without a problem. But buyers are rarely in that position.

Technically, it is a supply and demand issue, but the feedback loop takes so long that it needs some other force to keep it humming long term without sellers pushing society to the brink of disaster.

SSchick2• 4 years ago

The building we moved out of started doing referrals again, about 15% (according to a person I talked to at the leasing office) of their apartments are currently empty and they are still hiking prices, this isn't supply & demand, this is price systematic price gauging.

StrictDabbler• 4 years ago

It's not supply and demand, though, because the increases are well beyond vacancy pressures.

I currently live in a large luxury apartment complex in a cosmopolitan city with a moderately high vacancy rate. I'm about to move out because of a large rent increase.

Easily half the units in my complex are empty. Any reasonable person would look at that and say "gee, we need to bring prices down so that we have higher occupancy. Every month that a unit stands empty we're losing a whole month's rent."

Instead they use RealPage. It's obvious when a complex does this because the prices change day by day and negotiation is impossible. All the other apartment complexes in this city are using the same software. Even if RealPage isn't a collusive conspiracy any error in their pricing algorithm affects the entire city.

Rent on private houses are not set by RealPage so you can rent a large house here for what an apartment costs. Apartments are uniformly priced well above the "real" market price set by supply and demand. The entire city's vacancy slice is concentrated in the apartment buildings.

In order to rent apartments at above market prices the apartments here have gotten slack about income verification and background checks. The only people who want to rent an apartment for well above a mortgage payment are small-time drug-dealers who have enough income to pay but not enough clean income to get a mortgage.

RealPage is a market-distorting force. Inherently. In order to not distort the market they'd have to always evaluate supply and demand correctly.

sethd• 4 years ago

I'm sure a decent chunk of NH's population has lived or lives in properties that are or were using RealPage.

It took me a sec to realize you were referring to Hacker News and not New Hampshire. :)

loeg2• 4 years ago

These companies have turned areas they operate into upscale meat grinders that lure you with a "welcome" price only to systematically hike up your rent way beyond inflation.

This was the operating model of large landlords before RealPage, too. I happen to believe RealPage likely facilitates illegal collusion, but it's not like large commercial landlords were saints before.

ilyt4• 4 years ago

Right, but you got fucked over by private landlord, that just happened to use some service to coordinate it

The service might be the tool used to perpetrate the problem but regulating corporations won't help much here, if they are gone landlords will find a different way to coordinate

aaomidi2• 4 years ago

You’re not wrong. We should get rid of landlords and replace them with housing cooperatives.

jeffbee7• 4 years ago

Regulation might work but it’s complicated and expensive. The best thing you can do against landlords is abundant housing supply. Collusion isn’t going to work in practice in the face of 20% local vacancy rates.

andrepd4• 4 years ago

Perhaps it wouldn't, given a Georgist LVT.

Brystephor• 4 years ago

These companies have turned areas they operate into upscale meat grinders that lure you with a "welcome" price only to systematically hike up your rent way beyond inflation.

In my experience with downtown Seattle, the high end luxury apartments this rings true.

I had an apartment that I was renting for ~$4k a month and gave me like 1 month free. The building then decided when it was time to renew our lease, I should pay an additional $400 a month. I moved out of that apartment and then they relisted that apartment for $3700/month with a 1 month free offer.

My next apartment was $2300/month. Same thing, 1 month free. Come lease renewal time (1 year later), they said the new rent would be $400 or $500 higher (a 17% or 21% increase). Recently they've decided to give an "exploding offer" where the new rent would only be $2500/month with 8 weeks free if signed by X date.

TLDR: 10%+ rent increases are the norm for my building. I've never actually paid the full listed amount for rent though when you take the concession into consideration.

jseliger• 4 years ago

We should deregulate the housing-construction market to increase competition and decrease prices: https://www.aeaweb.org/articles?id=10.1257/mac.20170388

This is fundamentally a problem with housing restrictions.

fallingknife• 4 years ago

Unfortunately, the government knows they don't have to do this because the public is dumb enough just to blame the landlords, because that's who their checks go to.

loeg2• 4 years ago

We can do both!

switch007• 4 years ago

Imo corporate landlords need to be heavily regulated and need to be broken up.

A big issue at least here in the UK and Ireland is that many politicians are landlords.

How do we fix that…

ensignavenger2• 4 years ago

So your landlord priced the unit too high, you are moving to a competitor... sounds like the market working as expected to me?

SirSavary• 4 years ago

No where in the comment did OP say they were moving. They also stated explicitly that competitors were virtually non-existent:

Practically every other building in the area (downtown Redmond, WA) has increased prices in unison so there is basically 0 competition.

conductr• 4 years ago

Corporate landlords have large portfolios and more likely experienced the new “risk” that the government allowed people to not pay rent for almost 2 years IIRC. It’s hard to objectively try to analyze the situation and ignore that whole snafu.

spfzero• 4 years ago

Or, people need to calibrate their desires for housing to their ability to pay for it. When landlords have bought property that becomes more valuable, they made an investment that paid off. This is what happens everywhere all the time. People speculate, some win, some lose.

You've probably done it yourself, maybe by speculating on where to apply for employment. It's hard to win that way since millions of people can copy that thesis. There is only so much real estate however.

At each rent increase, you could re-evaluate whether the investment is working out for you and adjust accordingly. You could also lobby your employer to move somewhere more affordable. I understand that is not a simple or easy thing to do, and you have my empathy. I just want to give you some insight a bit above "yeah, fuck those guys, you got screwed" which is not all that helpful to you.

brookst• 4 years ago

I mean the whole RealPage pitch to landlords is that it will help you extract more rent by raising prices to keep up with everyone else who’s using RealPage.

puffoflogic2• 4 years ago

This is a literal conspiracy theory, but since it plays to the right set of biases I guess it's cool on HN.

Step888• 4 years ago

https://www.realpage.com/lp/harness-data-to-drive-results/

johnhenry• 4 years ago

This fits the strict definition of "conspiracy theory" -- a theory that a group of people are working together in secret (or "conspiring") to achieve a specific goal.

You're attempting to apply a connotation -- that the theory is unfounded -- that is usually associated with the term, but not definitive. This is particularly troubling in the face of the evidence presented.

voidwtf2• 4 years ago

I believe that, in modern English parlance, the idea that the theory is unfounded is the primary meaning. I doubt the strict definition was ever considered here.

voidwtf2• 4 years ago

Any further explanation how it’s conspiracy theory?

Those of us that rent, or have rented, have direct experience with rent hikes far exceeding cost-of-living increases and/or inflation. I am in a much better situation now, but previously rented a location that went from 740/mo to 1100/mo over the course of two years. This was pre-pandemic in 2012 - 2014 and coincided with similar rent increases across the city.

puffoflogic2• 4 years ago

It is a theory alleging a conspiracy. What part of that needs further explanation?

ecommerceguy• 4 years ago

And yet crickets out of anyone from the DOJ regarding the massive fraud that is happening everyday in crypto. I have no faith whatsoever in law enforcement anymore. Its all politics and thumbs on scales.

farseer• 4 years ago

Rent is unavoidable and essential to a dignified life. Crypto is for people with some spare cash who want to buy a thousand lottery tickets. The priorities of DOJ are correct. They are there to save you from the greed of others, not from your own.

mjburgess2• 4 years ago

Part of the problem with crypto is "elite capture", ie., the political class seem to have jumped behind it as with, eg., AI, quantum computing, self-driving cars etc. --- without realising that it's a pyramid-style hype phenomenon rather than a "innovation-style" one.

To defend them, it's really really hard to tell -- many technical people are economically incompetent and have been "captured"; and political people are far from either economically or technically competent.

However, of course, there's also a significant amount of money funnelled from this scam into political pockets. I'd say it's 80% the former, 20% the latter.

In any case, if the gov were to come down against crypto, they'd wipe the entire industry out. That would be a high-risk move from the political elite class on any ordinary technology, let alone one they've been captured to support.

est312• 4 years ago

SBF was the second biggest individual donor to Biden's election campaign, and he donated 8 times as much in the 2022 midterms to democrats. Newspapers close to democrats have made very positive pieces about him and his scam. Now after the collapse, the government is still after him. He will probably meet the fate of most upper class blue collar criminals, with low security prison for a low single digit number of years.

The political class protects you if you bribe them, and you can get really rich thanks to such cooperations. They will defend your shady real estate deal, your NIMBY-ism, your neo feudal constitutional amendments from 1978, or pro-corporate legislation. But this has limits, e.g. when you appear in newspapers as someone who has scammed tens of thousands.

I do think however that a thing such as "good" (in the sense of quality, not in the sense of impact on the world) elite capture exists, even for crypto currencies. Ultimately we might end up with one or two private crypto currencies that have managed to bribe the elites of the gun owning apparatus well, and then that apparatus will use the guns to eliminate the crypto currencies that didn't manage to do such elite capture. We might end up with privatized, state sanctioned currencies, just as large parts of the banking system are private, or how certain parts of the elite got first row access to massive Fed loans while the masses had nothing. In the end, elite captured crypto currencies will just be the people with guns deciding to use a different mechanism to distribute the goods the guns are protecting, instead of being the innovation the pro-crypto people have been dreaming about that deprecates the need for people with guns.

michael19993• 4 years ago

TBH - I consider that people in crypto opted out of the normal system of rules, and expecting the taxpayer to spend zillions of dollars investigating offshore entities conducting obvious ponzis is a waste of money. Crypto == lawless, and demanding help from the fiat system after the fact is embarassing.

michael19993• 4 years ago

This would be better if we formalized this with Matt Levine's Certificate of Dumb Investment.

As he said:

I am open to compromise on the details. The point is that the right general approach to the problem of people buying dumb investments is to give them much, much, much clearer and starker and scarier warnings before they invest, and then much, much, much less sympathy if they do it anyway.

https://marginalrevolution.com/marginalrevolution/2018/09/ge...

d23• 4 years ago

Is it just me or are there a lot more stories about the DOJ and FTC cracking down on abuse by actual big players lately?

tiahura• 4 years ago

Just you.

The stories, like this one, are about the the DOJ launching an investigation.

Wake me when they win the trial and survive appeal, or even get meaningful concessions in a consent decree.

dang• 4 years ago

Recent and related:

Lawsuit filed against rent-setting software RealPage - https://news.ycombinator.com/item?id=33317414 - Oct 2022 (50 comments)

Rent going up? One company’s algorithm could be why - https://news.ycombinator.com/item?id=33224502 - Oct 2022 (279 comments)

davidw3• 4 years ago

I don't believe that company is a 'force for good', but I don't think they would be able to corner the market in the face of actually abundant housing, either.

It's like we keep looking for the bogeyman that's driving up prices so we don't have to face up to the real problem: our cities' policies that prevent homes from being built, and our neighbors who support them.

If you'd like to join an organized effort to fight for housing, these are good groups:

* https://yimbyaction.org/2021/

* https://welcomingneighbors.us/

andrepd4• 4 years ago

There are housing price crises literally all over the world, even in places where restrictive city policies are not an issue.

I'm sure supply constraints make it worse, but the underlying problem is financial in nature: because of making housing a financial asset.

davidw3• 4 years ago

The housing crisis is far worse in places where artificial constraints make it so.

In general, the financial side of things drives the constraints, rather than the other way around. If I view my house as an investment, it's in my interest to see a constrained supply so that the value of my house goes up, up, up.

erik_seaberg• 4 years ago

Where is there a housing crisis with no restrictions on construction, and how much construction has been happening there relative to population growth?

Compared to the Bay Area, there are many, many places with vacancies at 80% (Weed, CA) to 99% (Detroit) lower prices. The problem is that everyone wants to live in a few good employment markets with local housing shortages imposed by zoning.

yieldcrv• 4 years ago

I think a productive step would be to force companies like realpage to publish all of their rents and history in real time

And then make a model that shows actual supply and demand in the area

This would be the first time that uniform data would be available thanks to SaaS companies

To skip the legislative issues of categorizing these kind of companies to begin with, it Could come with a settlement offer with DOJ

I think I’ll wrote to the DOJ about it

kactus• 4 years ago

I used to use RealPage OneSite when I worked in facility maintenance. As recently as 2018, it was an old clunky webapp that only worked in Internet Explorer.

At the time, I was like, why has no one disrupted them yet? but I later realized building boring, complex software like this is hard, and convincing an org with hundreds of satellite offices to switch is even harder.

InFlightThrow3• 4 years ago

Isn't this exactly how wages are set in tech?

Google, Amazon, Meta, etc. all report their payroll data to a centralized third party who then reports back to them what they should be paying their employees. Sure, companies can choose to nudge those numbers up or down, but it's exactly the same thing landlords are doing here.

We need to make colluding to keep rent high and wages low illegal.

luckylion3• 4 years ago

Wages in IT are high for the same reason that rents in these neighborhoods are high: demand is far greater than supply.

It feels great being on the supply-side and getting crazy money, but it feels bad to be on the demand-side and having to pay crazy money. And everyone will say that one of these is perfectly fine and the other is outrageous.

socialismisok• 4 years ago

No, I think the point being made is that it's bad to set wages this way. If every company is colluding, then wages are being kept artificially low. (Even in tech, where engineers are in demand.)

Neither of these is fine.

michael19993• 4 years ago

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

segmondy• 4 years ago

What if RealPage is not an American company? What will DOJ do? Tell them not to serve American customers? Tell American customers not to use it?

roflyear• 4 years ago

Why is this even needed? It is easy to look at the market and also to just look at CPI numbers and boost your rent.

refurb2• 4 years ago

I’m not sure how this is different (other than scale) of a landlord just pulling up a rental app, finding similar places as theirs and pricing similarly?

I mean, it’s not like other rent rates weren’t visible to landlords before this website same along.

DOJ will examine whether RealPage helped landlords coordinate rent increases

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