Rents are soaring. Is RealPage to blame?

https://www.businessinsider.com/apartment-rent-increases-landlords-antitrust-lawsuits-real-estate-software-realpage-2024-4

by unclebucknasty • 2 years ago

72 207 2 years ago

businessinsider.com

IronWolve• 2 years ago

Yes, its just price fixing, bypassing laws by using 3rd party tools.

And with no increase in supply and the increase of people needing housing, the prices can go only go higher. Infrastructure designed for populations 30-50 years ago, city planning didn't foresee the need for the public transportation and housing needs for these mega cities.

And then the increase in local taxes to try to compensate for the mass costs, and hurting the current tax base, is a major issue.

Top if off with the increasing inflation and interest rates which is also compounding the situation.

blakesterz• 2 years ago

And then the increase in local taxes to try to compensate for the mass costs

I don't know if it's like this everywhere, but our local taxes have gone up by a big percentage over the past several years. They say they haven't raised our taxes, but since valuations go up, our taxes go up... by thousands of dollars.

IncreasePosts3• 2 years ago

If valuations are up across the board, and the revenue requirements remain fixed, then your mill levy should be lower and your tax burden should be the same as the past. It should be pretty clear that your municipality is collecting more taxes than they were previously from published reports. If they aren't, then that means your property valuation has gone up more than others in your region...that should be considered a good thing, even if you have a slightly higher tax burden because of it.

nradov2• 2 years ago

This was the main reason behind California's Proposition 13 in 1978. At the time, homeowners were seeing their taxes go up and up every year just based on valuation increases. Meanwhile their incomes weren't necessarily increasing at the same rate. Prop 13 has had some negative effects but the anger by voters at the time is entirely understandable.

tnel77• 2 years ago

Exactly. Our tax rates were cut (very slightly) this year, but valuations are still up so the tax bill is up as well. The city acts like we should be super grateful.

WalterBright30• 2 years ago

Seattle keeps raising property taxes in order to reduce the housing shortage.

doctorpangloss• 2 years ago

On the other hand, the main reason the landlords using RealPage were not raising rent, seemingly, when they could, was vibes.

jasonjayr• 2 years ago

And don't forget stagnant wages, forcing desperate sales to those with capital in the bank go acquire property, and then rent it back for even more money....

bequanna• 2 years ago

…forcing desperate sales

Are you referring to single or multifamily property?

Either way, demand is strong and prices are high. Sellers still have a lot of power in this market and I haven’t really seen examples of anyone selling a property being taken advantage of.

throwaway447734• 2 years ago

Not to mention that construction has seen little gains in productivity over the past few decades resulting in the Baumol effect in the industry. There's little reason that constructing new housing cannot be automated to the degree that car construction is automated, but a variety of regulatory hurdles and little foreign competition makes building construction prices rise steadily. We need a well-funded startup to pull an Uber and indiscriminately sidestep regulation to disrupt the real estate market.

lotsofpulp2• 2 years ago

There's little reason that constructing new housing cannot be automated to the degree that car construction is automated

What experience do you have that you would be able to make a lofty claim like this?

Are the people working at DR Horton and Lennar and the like missing something obvious? I figure businesses that construct and sell tens of thousands of homes in a year are at the bleeding edge of figuring out how to most efficiently construct a house.

heavyset_go• 2 years ago

Maybe I need more coffee, but I can't tell if this is satire or not.

pksebben3• 2 years ago

We need a well-funded startup to pull an Uber and indiscriminately sidestep regulation to disrupt the real estate market.

Whether or not this would be to the public benefit in terms of automation, this is exactly what's happening here but with pricing. The law forbids price fixing, but courts are tech-dumb and so long as you pass your price fixing through an algorithm you've got decent shruggability on any claims made.

SkyPuncher• 2 years ago

There's little reason that constructing new housing cannot be automated to the degree that car construction is automated

I strongly disagree with this. I watch several general contractors on Youtube. They come across as smart, educated individuals. They frequently talk about the things they do to save time or optimize. Yet, it's obvious that huge portions of their job still involve on the fly decision making.

You might be able to automate this, but it'd come with incredible upfront costs to de-risk and plan every detail. Factory based manufacturing largely doesn't have to deal with this since the environment is so highly controlled. Further, automated manufacturing puts significant time ahead of production building draft parts.

romafirst34• 2 years ago

So if we are happy with criminality to “sidestep regulation” how would you feel about squatting vacant homes?

Netherlands had this problem in the 60s and the solution came in the form of a squatting movement.

I feel in the US people are ok with corporations committing crimes but not humans. Weird seeing as the humans are the ones without a home and the corporations are just trying to get rich.

https://en.m.wikipedia.org/wiki/Squatting_in_the_Netherlands

jimbob45• 2 years ago

Price fixing and no penalty for leaving units vacant.

natoliniak• 2 years ago

question: how can a municipality determine if a unit is vacant?

lenerdenator4• 2 years ago

And then the increase in local taxes to try to compensate for the mass costs, and hurting the current tax base, is a major issue.

My favorite is when jurisdictions let people past a certain age freeze the property tax rate at a certain point. Of course, these were the same people who:

1) campaigned against any and all housing that would disrupt the "charm" of the area

2) insisted on a 3/2 single-family home on a significant fraction of an acre

3) insisted that said home be miles away from the city center, requiring lots of infrastructure while simultaneously reducing the population density that would pay for said infrastructure

4) did nothing to shore up the budgets at the local, state, and national level over the last 30 years

tzs• 2 years ago

Are you under the impression that only people who fall into one of those four categories age?

ponector• 2 years ago

But actual data says opposite. Amount of housing is growing while household size shrinking.

>US-wide, homes built in the last 6 years are 74% larger than those built in the 1910s, an increase of a little over 1,000 square feet. The average new home in America, be it condo or house, now spreads over 2,430 square feet. It is also important to note that, parallel to the rise in living space, households have been getting smaller over the same period. In 2015, the average number of people in a household is 2.58, compared to 4.54 in 1910. This means that today the average individual living in a newly built home in the US enjoys 211% more living space than their grandparents did, 957 square feet in total

itishappy• 2 years ago

Does this control for short-term rentals? I could totally see us building more 3 bedroom Airbnb flats while simultaneously moving families into smaller apartments.

HumblyTossed• 2 years ago

Yeah, this is annoying. Even the 55 and older neighborhood that was built a few miles from me recently, the smallest is about 2K sqft. What the heck??

Surely the math must make sense to someone.

highcountess2• 2 years ago

There is an inundation of foreign nationals holding in various camps and temporary housing that are fueling inflation (gov’t money printing, aka fraud) and will drive price increases soon as they start being interleaved into society.

The other side of the equation is also that the same inundation of foreign nationals into the system will drive down wages.

We are all riding the dragon. We shall see how it unravels.

silverquiet• 2 years ago

This has long been a suspicion of mine; I've wondered what the actual ratio of housing square footage per person in the US is. I see the wealthy building palatial 3rd homes that are occupied a few weeks a year and wonder if that's a big enough demographic to have any noticeable affect on the national market. Seems wasteful regardless.

kaibee• 2 years ago

Data doesn't say anything. You need to interpret it correctly. For example, any time you see 'average', you should probably run away quickly, because it is almost certainly full of monsters.

https://www.thestar.com/news/insight/when-u-s-air-force-disc...

just some quick things that jumped out at me:

- of homes actually built, hides that there's a lot of demand for smaller starter homes or housing in cities

- the average household can get smaller if there's a bimodal distribution, ie poorer households growing in size. or people not having kids because they don't have and can't feasibly afford a spare bedroom.

- "the average individual living in a newly built home" im leaving this one as an exercise for the reader

panick21_4• 2 years ago

Totally wrong. Infrastructure was not designed for population 30-50 years ago. The opposite, to much bad infrastructure was built for to few people.

There are lots of town the same amount of people but about 5x more infrastructure per person.

Even the places with growth have massivly overbuilt infrastructure. And low value housing ever further out is just not helping because the housing + transport cost equation doesn't add up for people.

Its simply bad infrastructure, badly planned with a totally disfunctional insentive structure.

The infrastructre isnt actually supported by the local taxes and raising taxes can often even in the best case only cover maintenance at best.

Look at the data from Stong Towns or Urban 3. If R1 zoneing (single family homes) is 80% of you land and each on is losing money from a tax perspective, its not suprising.

You have medium sized cities that have to maintaine roads that can reach half way accross the country. Indianapolis has to maintaine a road that reaches from it to Alaska.

Lots of good infrastructure like trains and walkable neiberhoods were systematically destroyed and replaced with less efficent infrastructure.

Any county with a great inner city somewhere is profiting massivly and that city is paying for all the infrastructure around it.

Even delapidated inner cities are better from a a tax efficency point of view then single family homes or a wallmarkt.

The poor neiberhoods are overtaxed and the richer ones are undertaxed by a large margin. Even if you assume the poor get the full service they should have, and they often don't.

But im sure the solution is to make the highway threw Austin wider ...

nerdjon6• 2 years ago

(Side note, it seems weird that they are just now publishing this article when this was news 2 or 3 months ago?).

That being said, I noticed this with the apartment I am renting now. I checked daily and noticed the price was changing on a daily basis, I highly doubt this was done by a human. I ended up emailing them saying something like, I noticed the price was going down could we rent it for a few hundred less than what it currently is (it was going down close to $100 a day or something like that) and they agreed. I assume at some point the price would start going up based on when they expect people to look.

It is really weird to see prices fluctuate that much.

I even start to wonder if they purposefully don't list available units to keep a perception of availability issues to encourage renting at higher price.

xnx2• 2 years ago

Also news a year ago: https://news.ycombinator.com/item?id=34926683

nerdjon6• 2 years ago

I thought it had been a while, only felt somewhat confident in saying 2 to 3 months ago.

This article doesn't really add anything and its from a major site, so that makes this even more confusing.

I mean, not that we should not talk about it and we should continue to shine al light on it. But, idk something about that feels weird.

WalterBright30• 2 years ago

Prices of stocks vary moment by moment, too. It's what happens when there is a large number of buyers & sellers in a marketplace.

nerdjon6• 2 years ago

Stocks makes sense with that being a core part of how that market is supposed to work in the first place.

Rent prices changing daily really doesn't make a ton of sense, there isn't really a valid reason for it except for an algorithm trying to figure out how to make the most money. Under normal circumstances I would expect maybe a monthly adjustment, maybe weekly if it was for a single unit not for all units in a building.

Something like, oh this unit isn't renting we need to get it filled so let's adjust the price. That wouldn't really be a daily thing normally.

mitthrowaway23• 2 years ago

Prices fluctuate more when there are fewer buyers and sellers. This reduces the chance that there is both a buyer and a seller who happen to agree on a transaction price that is near the previous transaction price. As the number of buyers and sellers decreases, transaction volume decreases and volatility increases as price discovery gets more difficult. When transaction volume decreases to zero, there is no price discovery at all and the market price becomes effectively undefined. This could indicate a coming price crash or spike.

greenie_beans2• 2 years ago

we are talking about housing, not a stock. two totally, extremely, incredibly different asset classes.

10000truths• 2 years ago

Related discussion:

https://news.ycombinator.com/item?id=39575803

ajkjk2• 2 years ago

...among other things: years of not building enough housing, plus cost disease on the prices of housing construction, plus Airbnb eating into housing supply, plus most new development being in unwalkable subdevelopments or sterile 5-over-1s* so that the demand for anything walkable gets blown through the roof. I think that's the list?

Edit: oops, how could I forget anti-development zoning and Nimbyist development codes that prevent private solutions?

* I would love to know the actual name, or a good derogatory name, for that type of apartment; they're not all 5-over-1s after all. The real problem is the lifelessness, and that the ground-floor businesses, when they do exist, tend to be depressing and corporate, such that people don't want to pick them over older construction that is better integrated with neighborhoods.

Hansenq• 2 years ago

These are called double-loaded corridors, which are basically buildings required by North American fire codes to have two accessible interior stairwells for each unit. Unfortunately due to architectural constraints, this means that all new buildings built in the past few decades have interior "hotel-like" corridors and exterior flat, boxy frames.

North America is the only country that requires this type of fire construction--most other countries allow one interior staircase and an exterior staircase out of a window (like a ladder). Without this requirement, you're able to build buildings that are shaped differently, have windows in multiple directions, better support 3/4/5 bedroom condos, and are cheaper.

There's a movement to harmonize our fire codes with international standards; you can read more here: https://www.centerforbuilding.org/blog/we-we-cant-build-fami...

panick21_4• 2 years ago

Lets built houses out of wood mixed with oil and then make regulation to make it firesafe.

jeffbee5• 2 years ago

It is not price fixing, it is price finding. There is nothing wrong with a market maker existing. There is good evidence that markets with higher penetration of this software respond more quickly to declining markets than do other markets with disorganized lessors who maintain the "pretend and extend" strategy to rent setting.

brlewis• 2 years ago

From the article,

In fact, the lawsuits claim that RealPage shares "peer lists" with clients that tell them exactly who else is providing data to the company within a specific distance of their property.

This sounds like reassurance to a landlord that peers will mimic the same price moves. If true, I would call that price fixing.

jeffbee5• 2 years ago

You are hereby reminded that litigants can claim anything they want in a brief. The bar for sanctioning a party over unfounded claims is extremely high.

Another kind of marketplace that provides detailed information on the other bids and asks is ... every functioning marketplace you have ever heard of. Commodities, stocks, futures, farm produce, everything.

kibwen• 2 years ago

Demand for a roof over one's head is inelastic. Markets do not work for inelastic goods. These people can't just downsize; renting is the low end of housing, and the low end is being systematically crushed by the landed aristocracy, abetted by automated price collusion.

WalterBright30• 2 years ago

Demand for a roof over one's head is inelastic.

Quite the contrary. In my younger days, I could not afford an apartment. So what did I do? I got together with a friend who could not afford an apartment, either, and we shared an apartment.

I've also rented a house with multiple roommates to bring the cost down.

xnx2• 2 years ago

The type of roofs over one's head is hugely elastic. At low cost there is shared rental housing far from where someone might find ideal. At high cost you can build a custom stand-alone structure made of the finest materials on an acre of land.

nerdjon6• 2 years ago

It very well could be price fixing based on much of what has been talked about over the last several months about this. If RealPages is managing all of these prices for properties in a given area they are in a position to inflate prices gradually over a period of time.

It is a natural feedback loop of an algorithm like this. If it is designed to look at the properties around your location, and you try to get the most money for your property, over time those prices will go up as the algorithm tests what people are willing to pay for a given unit/building/location.

You could argue that this may have already happened with humans, but at a different pace and the algorithm is literally feeding its own inflated prices into itself.

Let's also not ignore that we are talking about housing here, there is a strong ethical side to not trying to price people out of places to live.

j_m_b• 2 years ago

They're soaring now, they'll be crashing next. Live by the algorithm, die by the algorithm.

jeffbee5• 2 years ago

Are rents falling in Austin because they don't use RealPage?

nerdjon6• 2 years ago

The problem is we have been saying there is going to be a crash for years. But I don't know if there will be until the supply problem is fixed in big cities.

Big dense towers are only going to go up so quick and until then, what is going to cause a crash? People are obviously paying these prices or they would be sitting vacant. It isn't like I can just pick up and say, I am not paying rent. I have to live somewhere. (Yes, I do fully realize that technically I could pickup and say exactly that, but realistically it's not a choice many would want to make if they have the choice).

I agree we need one, badly. But I just don't see it happening unfortunately.

bell-cot• 2 years ago

The rental market can stay irrational for longer than most people can go without a decent place to live.

NuSkooler• 2 years ago

I'm not sure why the bigger issue isn't being talked about more, but yes, algorithms and "AI" are deployed in fashions that optimize profit. That's it. Profit. It's only getting much, much worse.

happytiger• 2 years ago

This is correct. I am currently working on a system to do price and purchase monitoring and optimize people’s purchasing. One of the things that I keep having to work around is dynamic real-time personalized pricing systems as they are more prevalent than I realized.

It seems almost inevitable that everyone will move to subscription / surge pricing models unfortunately. There are no structural incentives for retailers to keep prices lower. Perhaps bulk purchasing will change the game at some point, but it seems unlikely.

RajT88• 2 years ago

personalized pricing systems as they are more prevalent than I realized.

Can you share the worst offenders? I am sure everyone is curious to know.

ETA: I wonder if this leads to an adversarial service, which lets you do "persona based straw buying" to get the lowest possible price.

WalterBright30• 2 years ago

Surge pricing also means doldrums pricing. The knife cuts both ways.

candiddevmike2• 2 years ago

If things keep going this way, we will all end up paying the maximum an AI or algorithm thinks you can/will pay based on all of the data about you, your region, your friends, etc. For everything, not just rent.

jeffbee5• 2 years ago

You forgot the big input: how many other lessors are offering properties. There isn't a dial that owners can turn to just raise rents in a 2-sided market.

gloryjulio• 2 years ago

Unless the supply problem is solved, there is no cure for not enough housing stock on the market. You can shuffle people around and then what? If there are only 10 holes and 20 pigeons and you can have 1 pigeons per hole, some pigeons are gonna end up in the wild

rlili• 2 years ago

Because otherwise it's communism. Or so those with power to change anything want us to believe.

WalterBright30• 2 years ago

What's actually happening is the prices get more and more accurate due to having more and more market information available.

WalterBright30• 2 years ago

The Law of Supply & Demand is to blame.

goles• 2 years ago

https://archive.is/MAfYj

lenerdenator4• 2 years ago

Software does what its users want it to do.

In the case of rents, the users want it to maximize profit.

The users want it to maximize profit because they've been told you can distill every facet of good and bad in a society to whether the line goes up.

Fauntleroy2• 2 years ago

Society's singular focus on shareholder returns is strangling everything. It feels like no good can be done in this world unless it makes the holy line go up. It's maddening.

lotsoweiners• 2 years ago

It feels like no good can be done in this world

Is this not subjective? My neighbor 3 houses down might have a very different idea of what “good in this world” means.

blackeyeblitzar• 2 years ago

This happens with compensation as well. It doesn’t have to include software to be problematic - it can just be about exchanging data with each other. Many companies share their compensation data with third parties via “surveys”, and those compensation data companies in return share industry data back to participating companies. This private signaling reduces wage competition but it’s not talked about much because the practice is visible only to HR teams and executives. Part of why they get away with this is an “antitrust safety zone” provided by the DOJ, where if you use a third party survey company and follow a couple other rules, you can get away with anti competitive practices. See the following:

https://www.shrm.org/topics-tools/news/hr-magazine/agenda-co...

The DOJ announced they were revisiting these safety zones in 2023, but it seems like they were only doing so in the context of the healthcare industry:

https://www.wsgr.com/en/insights/doj-withdraws-support-for-h...

Probably all tech companies also suppress wages this way. Enforcement and fines for these practices need to be stepped up, and new regulations are needed.

davidw10• 2 years ago

If this tool allows a market to be a bit collude-y, it may add a bit to rents, and it's worth suing them to see what comes out.

But that software won't get you LA rents in Houston. The macro picture is still supply and demand and we have to intervene there if we want housing to be more affordable in the places people want to live.

People are so desperate for some bogeyman to blame. Institutional investors! RealPage! Short Term Rentals!

Fixing those things would not hurt, to be clear, but lack of supply is the underlying issue, and it's often driven by local NIMBYism.

I went to a hearing to support the construction of 40 "units" (aka homes) in my city last week and got jeered at by a crowd of older, wealthy retirees who were SO ANGRY about those being built.

That same sort of scene (often with no one to speak in favor) is replayed day in and day out all across the country.

This isn't to say 'markets solve all problems' but legalizing a variety of housing is very much a step that your local city council can take.

It's a worthwhile issue to be involved in, because housing is at the nexus of so many other things - the economy, the environment, people's ability to live where they fit in best and much more. These groups are good:

* https://new.yimbyaction.org/

* https://welcomingneighbors.us/

kthejoker22• 2 years ago

From the article

Critics say the cooperation between RealPage and apartment managers has emboldened landlords to raise prices even if it means more units are left empty when tenants are forced to leave. Without RealPage, the plaintiffs argue, landlords would be hesitant to jack up rents; instead, they'd focus on keeping their buildings full.

So it sounds like in some point this is depressing utilization of existing stock.

And given that it is (literally) rent-seeking and no one else can build an apartment there that they would rent, it seems like it's exacerbating any supply issues we're experiencing.

davidw10• 2 years ago

Right, like I wrote, it's probably jacking rents up some.

But empty units are empty units and too many of them means you need to lower prices or you are losing out on money because you don't make anything from empty homes.

And whatever effects this has (I'm curious to see what comes out off the lawsuit), you're just not going to be able to say "wow, look at how much landlords in San Francisco are making.... gosh, I want to double my rents!" if you're in a place without a tightly constrained housing supply.

carllerche• 2 years ago

The easy solution is to tax vacancy at a rate that makes this strategy not profitable.

Y_Y2• 2 years ago

To add some clarity for those of us not so au fait with the terminology, rent-seeking refers to economic rent, which here is the different in the apartment rental price actually charged (with the benefit of RealPage) and the price that would otherwise arise in a market which was free of collusion.

The argument is that free markets are (somewhat) efficient and mean that we use our finite resources (like land) in the manner which generates the greatest economic benefit. Normally if you rent-seek by trying to jack up a price above what the market would dictate, someone will come along and out-compete you. The trouble is that it's difficult or impossible for someone to to produce a substitute good here, if there's no empty lot on the street and all the prices are artificially high then how can I come along and compete on price offering apartments on the same street?

ethagknight2• 2 years ago

Realpage is just a tool, and the landlord can use it different ways. We use it to help us optimize for occupancy so that we dont have units sitting vacant, AND so we can better manage our vacancy over slow periods. It is downright magical at times how it has seemed to predict softening market conditions when I thought the software was simply recommending discounts left and right

An owner choosing to let a unit sit vacant for an extended period is probably more worried about "tenants rights" (squatters) and how difficult it is to evict. You can't blame software if an owners chooses to destroy his real avg rents by letting units sit vacant longer than necessary. 3 months of vacancy to score a 1 year lease, but the opex bills keep coming... no thanks.

WalterBright30• 2 years ago

If this tool allows a market to be a bit collude-y, it may add a bit to rents, and it's worth suing them to see what comes out.

When I buy stocks, the price is set across the country, anyone can get a quote and see what it is at the moment. Is that collusion?

davidw10• 2 years ago

Housing is more limited geographically and while it's very far from a monopoly, larger providers might have some pull in the market.

IDK, we'll see what comes out of the lawsuit, I guess.

If more housing gets built, prices fall though, like in Austin.

renewiltord3• 2 years ago

Certainly not.

But consider an actual hypothetical cartel that is explicitly defacto and dejure price fixing. Suppose the members of this cartel instead create a new LLC. Suppose that new LLC now performs the role of price-fixing with the condition that not conforming will lead to expulsion from the price feed system. Has this transformation taken a cartel that is explicitly colluding and made it into one that is not colluding?

If so, we now have a mechanism to turn every cartel into a non-cartel via the umbrella LLC. And the latter costs $300 to set up in Delaware. So the anti-cartel law has a $300 bypass. Reasonable, I suppose if you believe that that law has reached the end of its utility.

digitaltrees2• 2 years ago

Is one central company telling every bank to hold shares and only release them in specific amounts to achieve optimal price? That’s what’s happening with real page, the supply side is being curated across the whole industry so there is no real competition and thus no real price seeking function. Free markets don’t work with that type of collusion.

katbyte2• 2 years ago

homes should not be an investment. no one needs stocks everyone needs a home.

objektif2• 2 years ago

Horrible, horrible, horrible analogy. There is so much to say about this but the bottom line is that stocks do not follow price fixing it is more a market equilibrium. This on the other hand is pure price fixing.

mydogcanpurr3• 2 years ago

Stocks are fungible. Housing is not.

alexb_• 2 years ago

At the end of the day, it keeps coming back to land values and land use. Over and over and over again. Land value tax fixes almost all of these problems - YIMBY is just a good alternative that solves some of the problems while being more easy to sell politically than a rewrite of our entire property tax system.

maxsilver3• 2 years ago

The macro picture is still supply and demand and we have to intervene there if we want housing to be more affordable in the places people want to live. legalizing a variety of housing is very much a step that your local city council can take.

We already did this ages ago -- most cities have already made all the changes you are requesting, years or even a decade ago. Your talking points are like 10 years behind the times, housing is already legal in 99% of the US right now. (basically everywhere that isn't SF / Bay Area). And you can see brand new 5+1s all over every city, as proof of it. (so much so, that press even writes about it - https://www.bloomberg.com/news/features/2019-02-13/why-ameri... )

Yes, neighbors complain and complain, and it's easy to focus on them, cause they're loud and annoying. But they don't win -- they complain, and then the investors win anyway, and still get to build almost anything they propose. (I'm in the Midwest, and I can count on one hand the number of times an investor lost a proposal -- they get to develop anything they want 99%+ of the time)

People are so desperate for some bogeyman to blame. Institutional investors! RealPage! Short Term Rentals!

Well, because those are actual issues, and "NIMBYism" isn't. "NIMBYism" is maybe 2% of the overall housing problem, while private equity, investors, illegal hotels ("Short Term Rentals"), pricing collusion ("RealPage"), and such are, collectively, probably ~50%+ of the problem.

There's dozens of problems at play with crazy-high housing prices. "NIMBYism" doesn't even rank among the top ten of them.

davidw10• 2 years ago

We already did this ages ago -- most cities have already made all the changes you are requesting, years or even a decade ago

No, they did not. This is divorced from the reality of most cities.

locopati• 2 years ago

something has to be going on nationally because rents even in 2nd and 3rd tier cities are also high (like 1st tier high). there should be some financial benefit to living in a less popular, lower population place that has less access to a great diversity of foods or an art/music scene.

davidw10• 2 years ago

Part of it is 'household formation' among millenials.

Someone asked this question in the Oregon subreddit, about why the demand for housing has gone up so much even if the population has not.

https://oregoneconomicanalysis.com/2023/10/26/household-form...

cyanydeez• 2 years ago

The macro picture is collusions drives up everyone's prices equally.

The same collusions occurs in multiple American categories. Americans think the free market lowers prices, but at the scale of macro business interests, it's in large conglomerates interest to raise prices under collusions, as they all win.

notaustinpowers• 2 years ago

As someone who worked in real estate for 8 years with 4 years in single-family property management, it is absolutely RealPage and all of the various automated tools that are beginning to populate the real estate sector.

When pricing rental properties, you look at comparables within an (often small) geographic area, making price adjustments for changes such as access to public transportation, proximity to business districts, "newness" of the comparables, amenities in the community, etc.

RealPage's pricing program does not have the ability to take those into consideration. Instead, an outdated 2bd/1ba, 20yo community that's 10 minutes to a business district is being priced comparatively to a just opened 2bd/1ba <1yo community smack dab in the middle of that business district. All because that new community also uses RealPage.

RealPage has also made it incredibly difficult to override their pricing suggestions. In many cases requiring the manager of the company themselves to contact RealPage, file an appeal, and wait for RealPage to approve the appeal.

RealPage is generating these pricing numbers by looking at their own customers, not at the larger market, and has taken that pricing power away from medium to large property management companies (which in recent decades have begun to consolidate the market).

This is what happens when technology companies enter an industry that has been largely stagnant for years with little to no regulation in how those 3rd party tech companies have to operate in a sector that, itself, is highly regulated.

There's a reason I left that industry, from my experience it's rotten to the core and is built to only benefit shareholders with little disregard for consumers and renters. You think Facebook's enshittification is bad and dangerous to consumers?

gedy• 2 years ago

Inflation and investors chasing returns. Whatever tools they use don't really matter, and is a distraction. Build (a lot) more market rate housing or even free gov't housing. Deal with inflation aggressively (even deflation) or raise all salaries and benefits to match.

dyim• 2 years ago

We got a great deal on our current apartment due to a combination of 1. user error & 2. one of these algorithms.

Our place was originally listed at $7,550 [1], but the leasing co used pictures from a shittier unit within the same building!

Naturally nobody was interested, so the pricing system automatically ratcheted the price down to $6,050, at which point we checked out the apartment & noticed the discrepancy between pictures and reality.

As people figure out the balance between "AI" and "common sense," I bet there's going to be tons of mispriced crap out there in market.

[1] (Numbers changed by ~5% so as to not doxx our apt #)

TMWNN• 2 years ago

We got a great deal on our current apartment due to a combination of 1. user error & 2. one of these algorithms.

I periodically look at available units at a complex I considered the last time I moved. A few months ago I saw a unit twice the size of my apartment for only slightly more (and less than other, smaller units in the complex), presumably because of a RealPage pricing error.

Moral of the story: When you're thinking of moving, start checking complexes you're interested in every day.

highcountess2• 2 years ago

That seems localized and also heavily driven by the market manipulations of and through government pushing urbanization and wasteful co-located office work, rather than pushing for distribution and decentralization and remote working.

In the area I am spending some time in it seems to be a different situation. Several large apartment complexes were clearly planned/started a few years and are now approaching completion, while the influx of people has clearly declined. We are taking at the very least many hundreds of not thousands of apartment units. Many of the complexes are struggling to fill and existing complexes that have been sold and over-leveraged over the last several years are being poached with lease-up type deals, e.g., two free months.

I would love to know if these complexes are also outperforming. My anecdotal intuition is that they are not doing well, and will only get worse if the urban lobby will succeed, which is likely as it is closer to and in control of power and more corrupted than the non-urban lobby.

avgDev• 2 years ago

The cost of owning homes and apartments is also going up.

Taxes on my property in a major metro area have nearly doubled since 2019. Inflation raised prices of labor and building materials. Insurance premium are also higher.

Rents will continue to go up, as there just isn't enough supply in most major markets.

dang• 2 years ago

Related. Others? Pretty sure there have been others...

I saw RealPage's crappy rent-jacking-up software so you don't have to - https://news.ycombinator.com/item?id=34926683 - Feb 2023 (403 comments)

DOJ will examine whether RealPage helped landlords coordinate rent increases - https://news.ycombinator.com/item?id=33744136 - Nov 2022 (123 comments)

RealPage and landlords illegally created a 'cartel' to set prices, lawsuit says - https://news.ycombinator.com/item?id=33633541 - Nov 2022 (3 comments)

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)

seydor• 2 years ago

Could it be that people have developed an aversion to buying homes and instead choose to rent? Are the prices of houses rising at the same rate?

Fauntleroy2• 2 years ago

I would love to buy a home, but cannot due to the extreme cost, therefore I rent. This is definitely not unique to me.

nerdjon6• 2 years ago

I would love to buy a place, my rent is well above what I could expect to pay for a mortgage in the same area (for likely a nicer place).

But rent around here being so high stands in the way of saving enough for a decent downpayment.

I do know some people who prefer to rent for the flexibility, but I don't think its enough for this.

jjice• 2 years ago

It's worth noting that Realpage owns their namespake product, but they've also acquired Propertyware and Buildium, two other property management systems, over the years. With that, they have access to quite a lot of rent market data to share to others - more than one my initially expect.

I believe there are about eight main pieces of software in the property management software space, but three of them are owned by Realpage.

Tangential, but it's a sad industry to integrate into if you're an engineer. Very archaic and dominated. I understand why, but that doesn't make it less depressing to work with.

screature2• 2 years ago

Propublica has also been covering RealPages including senate and DOJ investigations + proposed legislation

* (2022-10) https://www.propublica.org/article/yieldstar-rent-increase-r...

* (2023-03) https://www.propublica.org/article/yieldstar-rent-increase-r...

* (2023-11)https://www.propublica.org/article/doj-backs-tenants-price-f...

* (2024-01) https://www.propublica.org/article/senators-introduce-legisl...

(edit to fix bullet formatting)

michaelteter• 2 years ago

What is actually missing from discussions about pricing is this:

"What is a reasonable balance of profit for providing a service and benefit to those being served?"

Without tools like RealPage, a landlord will naturally set a price that results in enough profit to make it worth their time, effort, stress, etc.

Economies of scale can make a big difference here, as some of the overhead can be managed more efficiently by having a bigger business (more properties).

But when something like this tool, or just old-fashioned price collusion, enters the equation, inevitably the profits go up unnaturally. It is no longer a free market where every actor will work in their own best interest, but rather a gang of actors is able to extract more from others. This is also exacerbated by the gang not being dependent anymore on the people it serves (it's customers) for other services. In the past, you as a business owner would think twice about grossly overcharging your customers because some of those customers provided their own services which you dependend upon. But now, you can buy your good from cheaper foreign markets, and you can buy your labor from imported artificially-low-paid workers. You no longer have to care what your customers think about you, because you'll never need them.

At the end of the day, what is the point of a human's existence? Is it to make as much money as possible, irrespective of the service being provided or the exaggerated cost to the customers? Or is it to provide a needed service to others such that everyone can be reasonably happy?

Clearly we have been trending toward the former for some time now, as evidenced by the rapid rate of increase of human productivity rewards going to a very small percentage of the population (0.1%) https://fred.stlouisfed.org/series/WFRBLTP1246 .

This trend is not sustainable, because at some point the people will revolt. Maybe we'll all be dead before then from other issues we've caused, but given enough time on this path there will be a complete collapse of the current system.

bglazer• 2 years ago

Fun fact about RealPage that's not mentioned in the article: Jeffrey Roper is the guy who created RealPage's price setting product (YieldStar). Jeffrey Roper's previous professional experience was building a similar product for Alaska Airlines. Jeffrey Roper left that position when the U.S. Department of Justice indicted Alaska Airlines for price fixing and collusion using Jeffrey Roper's software. The feds even seized his computer as part of the investigation.

RealPage saw his resume and said, "Yep that's our guy. We want price-fixing software and we only hire the best".

stopyellingatme• 2 years ago

Thank you for this info!

ngram• 2 years ago

what is the problem ? Land is a commodity and this fact has wide social acceptance, so let's let the market do its job, or let's start discussing the nature of the principle of private property.

Rents are soaring. Is RealPage to blame?

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