There are a lot of bad and disgusting things about this, but the worst is the absolutely inhuman ways in which the landlords and company talk about it: This is housing, people’s need for shelter...
There are a lot of bad and disgusting things about this, but the worst is the absolutely inhuman ways in which the landlords and company talk about it:
“As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.”
“The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it,”
One of the algorithm’s developers told ProPublica that leasing agents had “too much empathy” compared to computer generated pricing.
This is housing, people’s need for shelter and a home, and they talk about it as just another profit vector. Because of course, at the end of the day, that’s what landlording is. This software has just made it possible for it to take on its newest, worst, most exploitative form.
If anyone is interested in a listen, one of my favorite podcasts, Behind the Bastards, did a two parter on this last year, based in large part on the ProPublica reporting.
Since this article was published there was a class action filed against RealPage for collusion, but the latest I found from my cursory search was some fighting over control of these lawsuits and...
Years, probably. I wouldn't expect discovery to get started until late summer or fall, assuming RealPage doesn't have any challenges to the pleadings. And discovery is where things get...
Years, probably. I wouldn't expect discovery to get started until late summer or fall, assuming RealPage doesn't have any challenges to the pleadings. And discovery is where things get interesting.
I don't have any connection to these law firms. I just lived in one of the buildings run by one of the companies being sued. The rent went from $1050 a month to $1900 over 10 years. Problem was, pretty much every other place I looked was raising rent the same amount.
When I moved in, the building was full. It wasn't the fanciest place to live, but it was fine. The last few years, there were more and more empty apartments, and they stayed empty for months. Rent kept going up. Some apartments turned into Airbnb's. Car break-ins and lots of trash came along with that. When the pandemic hit, a homeless camp popped up a couple blocks away. A lot of them were people who looked like they used to live in the neighborhood.
Some people will argue they’re just pricing at what the free market allows them to charge, while that supposedly “free” market is substantially constrained by zoning laws. So we end up with a...
Some people will argue they’re just pricing at what the free market allows them to charge, while that supposedly “free” market is substantially constrained by zoning laws. So we end up with a market where demand is increasing in many areas while supply is artificially capped and prices run wild.
Most of these zoning laws remain in place because of neighborhoods 1. being scared of “the type of people” apartments / cheaper housing bring in, 2. saying they’re “full” and traffic will become unbearable, while insisting on driving a nearly empty car everywhere and voting against public transit, again to keep out “the wrong kind of people”, and 3. Not wanting their insanely high housing prices to drop, essentially pushing the problem off onto other neighborhoods while clearly stating that artificially inflating their wealth is more important than providing housing to others. Zoning laws on what type of residential builds can occur need to be overhauled so the market can catch up to demand, specifically in areas like Seattle and CA where the markets been allowed to rise to unsustainable levels.
I’m glad to live in a rust belt city where these laws never took hold to that degree, and I get to watch new multi-unit housing pop up left and right while single family housing remains abundant for those who need it. Our city isn’t perfect but making rent or buying a home aren’t a major obstacle for those around me.
The problem of course with the free-market argument is that, even without noting that many "free markets" are in fact not, even well-behaved free markets suffer from market failures. In...
The problem of course with the free-market argument is that, even without noting that many "free markets" are in fact not, even well-behaved free markets suffer from market failures.
In particular, there are specific dynamics which give rise to highly-oppressive dynamics:
The Iron Law of Wages: wages fall too (or below) a subsistence level.
The Law of Rent: Rents (in the economic sense) rise to appropriate all "consumer surplus". That is, the value that normally accrues to the person purchasing, or renting, a good or service. Note that these operate in opposite directions, as the law of wages sees the buyer (the employer) gaining all marginal benefit.
Public goods: classes of goods in which benefits accrue to others than the direct purchaser, in which beneficiaries cannot be excluded, or where marginal cost of production (the cost to create an additional unit of good) is zero. "Public good" describes the behaviour, not necessary who is provisioning the good, e.g., the public good of information need not come from a governmental body, though in cases it does.
There's another dynamic I've noted which is little discussed in mainstream economics: that it's possible to benefit not by the production of goods but through manipulating asset prices to inflate. This is a tremendous share of "wealth creation", and includes real estate, financial markets, intellectual property, and even major aspects of the standard operations of firms. What it doesn't involve is actual production of new goods or services, but of the exploitation of an extant monopoly or control over the overall supply.
In the case of real estate: zoning, permitting, bank-owned properties (which may or may not be "released to market"), effective redlining (officially illegal though still extant through covert methods), and links to other forms of artificial scarcity or value, such as school quality and district boundaries.
They give a few numbers to give a sense of the scale of this, but there's apparently nothing up-to-date since the company went private: [...]
They give a few numbers to give a sense of the scale of this, but there's apparently nothing up-to-date since the company went private:
RealPage was pricing 1.5 million units, and the acquisition of LRO would double that, Steve Winn, RealPage’s then-CEO, said at a mid-2017 investor conference. “I don’t think there’s any concentration, enough concentration, of buying or pricing power here” to warrant DOJ concerns, he said. A third company had a substantial footprint in the market, Winn said, but property managers’ own manual pricing processes or proprietary systems were RealPage’s largest competitor.
[...]
RealPage’s influence was burgeoning. That year, the firm’s target market — multifamily buildings with five or more units — made up about 19 million of the nation’s 45 million rental units. A growing share of those buildings were owned by firms backed by Wall Street investors, who were among the most eager adopters of pricing software.
RealPage renamed its combined pricing software AI Revenue Management. By the end of 2020, the firm was reporting in a Securities and Exchange Commission filing that its clients used its services and products to manage 19.7 million rental units of all types, including single-family homes. The private equity firm Thoma Bravo bought the public company a few months later for $10.2 billion.
There are a lot of bad and disgusting things about this, but the worst is the absolutely inhuman ways in which the landlords and company talk about it:
This is housing, people’s need for shelter and a home, and they talk about it as just another profit vector. Because of course, at the end of the day, that’s what landlording is. This software has just made it possible for it to take on its newest, worst, most exploitative form.
If anyone is interested in a listen, one of my favorite podcasts, Behind the Bastards, did a two parter on this last year, based in large part on the ProPublica reporting.
Why is this not considered a form of collusion?
That's ... up for debate: https://tildes.net/~finance/16lm/rent_going_up_one_companys_algorithm_could_be_why#comment-8lws
Since this article was published there was a class action filed against RealPage for collusion, but the latest I found from my cursory search was some fighting over control of these lawsuits and that a bunch of the lawsuits were getting consolidated so it might be a while before we get justice from the justice system.
Years, probably. I wouldn't expect discovery to get started until late summer or fall, assuming RealPage doesn't have any challenges to the pleadings. And discovery is where things get interesting.
Just in case anyone is interested, a couple of the law firms that filed the lawsuits have websites where you can find out if you lived in one of the properties where RealPage was used and submit a copy of your lease.
I don't have any connection to these law firms. I just lived in one of the buildings run by one of the companies being sued. The rent went from $1050 a month to $1900 over 10 years. Problem was, pretty much every other place I looked was raising rent the same amount.
When I moved in, the building was full. It wasn't the fanciest place to live, but it was fine. The last few years, there were more and more empty apartments, and they stayed empty for months. Rent kept going up. Some apartments turned into Airbnb's. Car break-ins and lots of trash came along with that. When the pandemic hit, a homeless camp popped up a couple blocks away. A lot of them were people who looked like they used to live in the neighborhood.
Some people will argue they’re just pricing at what the free market allows them to charge, while that supposedly “free” market is substantially constrained by zoning laws. So we end up with a market where demand is increasing in many areas while supply is artificially capped and prices run wild.
Most of these zoning laws remain in place because of neighborhoods 1. being scared of “the type of people” apartments / cheaper housing bring in, 2. saying they’re “full” and traffic will become unbearable, while insisting on driving a nearly empty car everywhere and voting against public transit, again to keep out “the wrong kind of people”, and 3. Not wanting their insanely high housing prices to drop, essentially pushing the problem off onto other neighborhoods while clearly stating that artificially inflating their wealth is more important than providing housing to others. Zoning laws on what type of residential builds can occur need to be overhauled so the market can catch up to demand, specifically in areas like Seattle and CA where the markets been allowed to rise to unsustainable levels.
I’m glad to live in a rust belt city where these laws never took hold to that degree, and I get to watch new multi-unit housing pop up left and right while single family housing remains abundant for those who need it. Our city isn’t perfect but making rent or buying a home aren’t a major obstacle for those around me.
The problem of course with the free-market argument is that, even without noting that many "free markets" are in fact not, even well-behaved free markets suffer from market failures.
In particular, there are specific dynamics which give rise to highly-oppressive dynamics:
There's another dynamic I've noted which is little discussed in mainstream economics: that it's possible to benefit not by the production of goods but through manipulating asset prices to inflate. This is a tremendous share of "wealth creation", and includes real estate, financial markets, intellectual property, and even major aspects of the standard operations of firms. What it doesn't involve is actual production of new goods or services, but of the exploitation of an extant monopoly or control over the overall supply.
In the case of real estate: zoning, permitting, bank-owned properties (which may or may not be "released to market"), effective redlining (officially illegal though still extant through covert methods), and links to other forms of artificial scarcity or value, such as school quality and district boundaries.
Related article from earlier this year:
https://tildes.net/~finance/1492/new_yorkers_never_came_flooding_back_why_did_rents_go_up_so_much
They give a few numbers to give a sense of the scale of this, but there's apparently nothing up-to-date since the company went private:
[...]