Hacker News
points by rabidheuristics 1 day ago | 0 comments
“None of the companies admitted fault or liability. They did, however, agree to stop providing Realpage with their nonpublic data for use as an input in Realpage’s revenue management system’s price recommendations, and to stop using Realpage’s RMS in ways that use competitors’ non-public data to inform pricing recommendations”.

Okay but Realpage has a decade of real pricing data that it can use to continue informing these rental companies and outside of them having extremely hard boundaries in their service this is just going to happen again.

This doesn’t do a whole lot to address the actual issue, and these companies aren’t going to stop colluding over a wrist slap like this.

[–] flessio 16 hours ago
They absolutely won't stop. They will continue to do this manually - they already do / did. This software just saved them legwork.

And now they are using AI tools to handle the emails related to renting including price negotiation.

There is a non-trivial amount of data science work put into these tools with the explicit goal of keeping rents high and using all available data (ex. your credit score, history at other buildings they own, your payment history, local pricing landscape and tons more) to extract the maximum you're willing to pay.

Virtually all large landlords use them on just about every channel - email, website chat, SMS and even phone now.

This is why we created https://fless.io to level the playing field and bring some of the same tactics to the renter side in addition to saving the emailing / scheduling hassle.

[–] xvedejas 1 day ago
Is there an actual issue? I've seen compelling arguments that places that banned the practice of algorithmic rent setting did not see any appreciable drop in rents. I'm almost convinced the problem is entirely supply side.
[–] ctmlr 1 day ago
The problem is political, landlords run every level of government and use that power to artificially limit housing supply.
[–] throwaway85825 16 hours ago
Landlords aren't developers, they don't control the supply.
[–] ctmlr 16 hours ago
All of the political representatives are landlords and they control supply through the legal system.
[–] throwaway85825 16 hours ago
Again, landlord is a customer service job. It's developers that build housing, not landlords. Developers have representation landlords don't. After my city passed new tenant laws the city lost ~15k units which increased rents. In response the city asked landlords how to improve the market then proceeded to do nothing with what they were told.
[–] preg_match 13 hours ago
Basically everyone in the US even kind of wealthy or with any political power owns property. When you own property, the best move in your self interest is to not build more property. Many upper-middle-class peoples wealth is held entirely in their property.

There’s basically no political will anywhere to make it easier to build.

[–] hluska 16 hours ago
If it was this simple, poverty would not be an issue. You’re reducing a serious problem to the most simple slogan and it doesn’t help anyone.
[–] FireBeyond 17 hours ago
In my town the biggest property developers are openly best friends with the county commissioners and planning / zoning board.

And by best friends I don't mean "run in the same circles" but "go on vacation together with their kids", "are in each other's wedding parties", "are godparents to each other's children".

And then they have the audacity to act surprised when the public is pissed that, despite traffic studies showing that there's no road capacity and no room for adding lanes to arterials, despite environmental impact studies about the shoreline showing negative effects, that the commissions sign off on their buddies and their developments without even a hint of hesitation.

[–] ctmlr 16 hours ago
You can't even name and shame because there is no shame, it's like this is every city big and small.
[–] carlosjobim 22 hours ago
There's more housing than people. What's artificially limited is salaries. Higher salaries would mean massive benefits for workers and businesses. And catastrophe for non workers and real estate.
[–] Aunche 19 hours ago
There is not more housing than people in places where people have the highest income. The median income of Sunnyvale is twice that in the US, but the median house is 5x more expensive there.
[–] carlosjobim 15 hours ago
If you plan to stay and work there for 5 years or more, it's still worth it, isn't it?
[–] sokoloff 21 hours ago
I’m struggling to see how real estate would be catastrophically harmed by higher salaries. Could you help me see the line between those two points?

Naively, if I knew everyone’s salaries were about to double, I’d hope to be holding a fair amount of real estate going into that doubling.

[–] carlosjobim 19 hours ago
Higher salaries = everything which is produced by working becomes more expensive. That is not a problem for people who work for a living, because they have higher salaries and can afford it. But it is a problem for those who do not work, because they'll might have to sell their surplus real estate to afford cost of living.

But mainly it is that you would need to remove or decrease benefits for those who do not work in order to have room for higher salaries. That is not a problem for the unemployed because higher salaries means that the only people without work are those who do not want to work. But it is a big problem for those who do not want to work and for example would like to live off their real estate.

The gut reaction to higher salaries is that people would have more money to purchase real estate or pay rent, but I think the downwards effects for real estate are much stronger. And the evidence is that in every country which has seen a period of high salaries for workers, real estate has been cheap during that period for workers to buy.

[–] Loughla 18 hours ago
> And the evidence is that in every country which has seen a period of high salaries for workers, real estate has been cheap during that period for workers to buy.

Real question. Do we have evidence of this from anything except developing economies pulling countries out of poverty? Like a first world country sort of thing. Because to me it seems like higher salaries comes first, and the property would lag for a bit while the market reaches its new level. Does that make sense?

[–] carlosjobim 16 hours ago
I think that high salaries / increasing salaries is the foundation for an economy developing at all. So cause and effect are reversed from what you mention, if I understood correctly.

High salaries and cheap housing was the reality in I think every first world country when they developed after WWII.

[–] SoftTalker 17 hours ago
Why would the landlords not raise their rents just like everyone else? When everything is multiplied by the same factor, nothing changes. You might have 2x the salary but if rent and food and everything else is 2x also, your buying power stays the same.
[–] Timon3 13 hours ago
When salaries are high enough, more people can invest in building more housing. So as landlords drive up the prices, the market balances.

But since the wealth gap keeps widening, fewer and fewer workers can afford this, as they get priced out of locations that offer good employment. At the same time the rich keep investing their money into higher-margin industries. Consider that for landlords owning enough housing, building more can have a negative RoI, and they all know that they all know this!

If you don't believe me, think about just how quickly the datacenter boom became reality. All that money was waiting around, and evidently could have been turned into a lot of building activity in a short amount of time.

[–] throwaway85825 16 hours ago
Because rent is set by supply and demand, if you price too high renters will move somewhere else.
[–] Marsymars 19 hours ago
> There's more housing than people.

I don’t think this is really true. It’s naively true if you just look at the number of homeless people vs the number of empty units, but misses:

1. That markets need some portion of empty units for fluidity.

2. That many people aren’t homeless, but living in situations where they would take more housing if it was available. (Living with roommates, ex-partners, family, etc.)

3. Many places simply don’t have enough housing for everyone who wants to live there. If they did, people would move from other places.

[–] spwa4 18 hours ago
You know, this is actual economic orthodoxy. The government is supposed to stimulate the productive economy (the part that's not rent-seeking like landlords) by causing inflation by overpaying it's employees (and hire). Which then forces private employers to pay more and causes high inflation. Why? This haircuts existing debts, both public and private and is very bad for rent-seeking, and good for anyone productive (making money).

Of course, that also shows the problem: it haircuts pensions as well, since they are a large part of the rent seeking class.

[–] Grombobulous 17 hours ago
There are other good reasons to have a reasonable amount of inflation.

If inflation is too low or doesn’t exist, then there’s less incentive to do anything with your money. If I have bunch a money that I don’t need to spend immediately, and I just want to keep it secure, why would I not keep it in a safe or non-investment account if it’s not losing value over time? What’s my incentive to risk it by lending it out to someone else?

Sure, I could say that my incentive is the interest rate, but my alternative is zero risk. Inflation turns “zero risk” into being more like a certainty of slow value loss, so that holders of capital are incentivized to do something at least minimally risky with that money (e.g., lend it to the government in the form of treasury bonds or deposit it into an insured bank account).

Debt has something of a bad reputation and obviously it can be overused and abused, but it’s also something that helps the efficiency of economies. It maximizes the amount of money actively participating in the economy rather than sitting.

[–] bigbadfeline 16 hours ago
> Sure, I could say that my incentive is the interest rate, but my alternative is zero risk.

The risk of missed purchases isn't zero and the risk of missing investment profits isn't zero either. From motivational point of view, inflation and deflation aren't different, they're the same thing in a mirror image.

Deflation is rare as hen's teeth, harmless and extremely easy to fix. Inflation, on the other hand, is the most corrupt economic phenomenon by far, it's hard to fix and it has ruined numerous economies, caused wars, destruction and famines.

> Debt has something of a bad reputation and obviously it can be overused and abused, but it’s also something that helps the efficiency of economies.

This is a strawman, nobody said debt as such was bad. However, since you started, let me correct you - as it is, debt not only "can be overused and abused" - it is routinely abused and overused and inflation is a huge part of it.

[–] bigbadfeline 17 hours ago
I'm surprised nobody has mentioned the role of datacenters in this entire comment section. I should know better, I guess.
[–] trollbridge 20 hours ago
If housing supply is constrained, higher salaries simply mean people bid more on rentals and rents go higher.

The only answer is to build more housing and have a high property tax in unoccupied housing.

[–] carlosjobim 20 hours ago
But housing supply is not constrained. There is more housing than people.

You could build as much more housing as you want, but if those houses only become accessible to purchase for those who already own real estate instead of for those who work, then nothing will change.

[–] wilbo 17 hours ago
I do not understand how you are reaching the conclusion that housing supply is not constrained. Can you please explain what you mean by that?
[–] DANmode 1 day ago
Is allowing price-fixing and deniability (ans a service) across 100 mile regions a problem, while you yourself are highlighting a supply-side crisis?

Yes. That’s a problem.

[–] xvedejas 1 day ago
If it's causally linked to higher prices, I agree. My question is whether we certainly know it's causally linked. In my mind right now it's similarly plausible that these things are just snake oil sold to landlords. There are a ton of conspiracy theories that would be a real problem, if true.
[–] AnthonyMouse 1 day ago
It's snake oil.

Landlords have an inherent trade off between holding out for a tenant who would pay a higher rent and not having the unit vacant in the meantime. Holding out for longer than that helps the other landlords at your expense. Meanwhile there are a large number of landlords, there is no way for the ones using a given system to force the others to do the same, and a significant percentage of them don't.

So if the system tells the landlords using it to do the thing that would increase rents if every landlord was using it, the "defectors" who don't use the system win out over anyone using it, which means using the system rather than defecting would cause you to lose money and everyone would have the incentive to defect.

Whereas if all the system is doing is suggesting the optimal point in the trade off between holding out for a higher paying tenant and renting the unit sooner, without assuming the other landlords are being required to use the same system, that's the same thing an individual landlord would do if they're not colluding.

The actual way landlords collude is through zoning boards, because then they have an enforcement mechanism, i.e. if someone is trying to defect by adding new units to alleviate the limited supply then the other landlords can sic the government on them, having passed the various laws against constructing those units there.

[–] bostik 22 hours ago
> So if the system tells the landlords using it to do the thing that would increase rents if every landlord was using it

This is precisely what happened. Quoting from my comment at the time (https://news.ycombinator.com/item?id=39579488) --

Subscribing to a pricing data service: legal.

Using data feed to guide pricing and set initial figures: legal.

Agreeing, either implicitly or explicitly, to let the pricing data feed set the price floor: collusion.

Leaving units unsold and refusing to lower the price despite insufficient demand: usually a bad business decision, possibly indicator of a market failure.

Leaving units unsold to maintain agreed-upon price floor despite insufficient demand: collusion, market manipulation. Congratulations, you are a cartel.

[–] AnthonyMouse 12 hours ago
> This is precisely what happened.

You're assuming they were the first kind of fools rather than the second kind.

> Leaving units unsold to maintain agreed-upon price floor despite insufficient demand: collusion, market manipulation. Congratulations, you are a cartel.

Which is the thing that doesn't work when many other landlords aren't in on it, because then they get to fill their vacancies while you're stuck with the empty units.

Notice also that antitrust prohibits attempts to monopolize. Fools are quite capable of doing something which is still a violation of antitrust laws despite being ineffective and unprofitable.

[–] DANmode 20 hours ago
> possibly indicator of a market failure.

Almost always.

The trick is figuring out where the failure is coming from, and whether your society can find a lever to pull to fix it.

[–] trollbridge 20 hours ago
Homeowners are usually the ones who don’t want more building, not amorphous landlords who have very little control over zoning and permitting in a place like the Bay Area.
[–] AnthonyMouse 12 hours ago
Homeowners and landlords don't want more building for exactly the same reason: They own property there and consequently want it to become more scarce so the price of their asset goes up at the expense of tenants and new homeowners.

In general the homeowners are more numerous but the landlords are somewhat more organized.

The homeowners are also being taken for a ride, because less restrictive zoning reduces the value of units (since you can increase the supply of them) while increasing the value of each piece of land (since you can now build more units on it). And the homeowners (and small landlords) are typically the ones with a high ratio of land to units, but they get hornswoggled into demanding the thing that really benefits the corporate landlords who own the existing high density buildings.

[–] consensus1 23 hours ago
There is no price fixing. They just enabled landlords to find out how high the market price actually was when they didn't know it before due to it being a very opaque market.
[–] DANmode 20 hours ago
The market price is the price for which people are renting places based on market forces.

If the only market forces are landlords keeping half of their units empty so they can keep $1400 units priced at $2400 because that’s what the software (and indeed service) are pushing them to do, that’s price fixing.

There’s extra steps, it’s a new form, but the price is fixed, and the point of allowing housing to be built isn’t being fulfilled.

[–] consensus1 20 hours ago
Math failure here. If you keep half your $1400 units off the market and get $2400 for the others you are losing $400 per unit. Also there is zero evidence any landlords were doing this.
[–] DANmode 17 hours ago
Maybe you’re misunderstanding.

I’m speculating the price would be closer to $1,400 per unit.

The price across this hypothetical town is $2,400 per unit (let’s say it’s a 2 bed 2 bath apartment), “suggested”/set by RealPage software.

Because that’s how using their product worked.

Half of them sit empty because their business model doesn’t care (tax deductions on other income, while still increasing total assets in their portfolio).

There is…a good amount of evidence of landlords doing this, and how:

https://www.justice.gov/opa/pr/justice-department-requires-r...

and

these landlords coordinated through a variety of means, including:

Directly communicating with competitors’ senior managers about rents, occupancy, and other competitively sensitive topics. In one example, Greystar supplied Camden with information not only about very recent renewal rates, but also its approach to pricing for the upcoming quarter, its acceptance of RealPage’s pricing recommendations, use of concessions and competitively sensitive information about occupancy. Likewise, executives at Camden and LivCor communicated over the course of months about their pricing strategies, including plans for certain price increases. Regularly conducting “call arounds.” During these discussions, euphemistically referred to as “market surveys,” property managers called or emailed competitors to share, and sometimes discuss, competitively sensitive information about rents, occupancy, pricing strategies and discounts. Participating in “user groups” hosted by RealPage. For instance, landlords discussed via user groups how to modify the software’s pricing methodology, as well as their own pricing strategies. In one example, LivCor and Willow Bridge executives participated in a user group discussion of plans for renewal increases, concessions and acceptance rates of RealPage rent recommendations. Sharing information with competitors about parameters in RealPage’s software. As an example, at the request of Willow Bridge’s director of revenue management, Greystar’s director of revenue management supplied its standard auto-accept parameters for RealPage’s software, including the daily and weekly limits and the days of the week for which Greystar used “auto-accept.”

[–] consensus1 13 hours ago
"Half of them sit empty because their business model doesn’t care"

What kind of insanity is this? Your entire argument is based on landlords not caring about occupancy, when that is actually the number one thing they care about. You obviously have no idea how any of this works and your linked source does not say a damn thing about landlords intentionally leaving units vacant.

[–] pessimizer 19 hours ago
Except you can write off those $1400 units as $2400 of losses that will offset profits from another part of your business.

Not everything is "Economics 101."

[–] jasode 18 hours ago
>Except you can write off those $1400 units as $2400 of losses that will offset profits

No, the IRS doesn't allow tax deductions for the "missing $2400 rents" of unrented units. IRS only allows deducting ongoing expenses such as "maintenance, insurance, taxes, and interest," :

https://www.irs.gov/pub/irs-pdf/p527.pdf

[–] consensus1 17 hours ago
If you want to commit tax fraud you can still do that while renting out your units.
[–] lotsofpulp 20 hours ago
You don’t need evidence for vibes based thinking. The goal is to satisfy emotional needs, not logical consistency.
[–] skybrian 1 day ago
What about when market prices are public? Is knowing the market prices collusion?
[–] omgwtfbyobbq 1 day ago
It can be, if everyone also acts to keep prices high by behaving in ways that aren't typical.

https://en.wikipedia.org/wiki/Tacit_collusion

[–] markasoftware 1 day ago
Reminds me of the extremely interesting paper https://arxiv.org/abs/1904.05234 Flash Boys 2.0

Basically when somebody makes a pricing error on a decentralized cryptocurrency exchange there's a mob of automated arbitrage bots that try to trade against it. Who wins and actually gets to make the trade is mainly determined by how high of a transaction fee your bot is willing to pay.

You can win instantly by offering to trade with a transaction fee so high it almost wipes out all but a cent or two of the entire arbitrage profits, because nobody else will pay a higher fee.

Instead what happens is bots offer the lowest possible fee, then immediately increase their fee as soon as they see a competing bot try to take the trade with a higher fee. This results in the bot offering the highest fee changing every several milliseconds as the fee quickly grows.

The way Ethereum mining works, this results in the winning bot being randomly selected from among the set of bots "bidding" up the transaction fee: blocks are mined at random intervals of iirc about 20 seconds, and whoever had the highest bid at the time the next block is mined wins. <20 seconds of bidding is short enough that even with the bidding, the transaction fee doesn't get bid up particularly high, and the winner makes out with a highly profitable arbitrage trade.

By giving up a guaranteed win and instead rolling the dice against other bots, transaction fees stay low and everyone has a higher expected profit. It's coordination that happens without any communication between the participants and quite possibly the participants didn't realize they were in effect cooperating when they added the high speed bidding behavior to their bots.

[–] JumpCrisscross 1 day ago
> You can win instantly by offering to trade with a transaction fee so high it almost wipes out all but a cent or two of the entire arbitrage profits, because nobody else will pay a higher fee

This is like 1980s sawtooth algos in real finance.

A lot of crypto is former HF folks taking old strategies to a dumber field.

[–] consensus1 23 hours ago
I have really enjoyed watching crypto act like they are white knights against the evil traditional financial system and then go on to reinvent it piece by piece.
[–] 59percentmore 21 hours ago
You're assuming that the contention was with the functionality and not with who controlled it.
[–] mrtesthah 18 hours ago
The current players in crypto are the same people. And there’s noting systematic about crypto that changes this — people with money can afford to buy more mining capacity or stake more coins.
[–] lotsofpulp 20 hours ago
There’s nothing evil about aiming to earn a penny or a fraction of a penny on a transaction.
[–] JumpCrisscross 14 hours ago
There is something evil, however, about scaremongering around fractions of a penny to convince folks to move money to one where the spread is several percent.
[–] malfist 18 hours ago
Who pays that penny?
[–] sandworm101 21 hours ago
That isnt cooperation. That is basic market principals in action. Bid and counter bids that whittle down the profit margin based on willingness to risk a win/loss? These are auction principals as old as time. This is reaction rather than cooperation.
[–] markasoftware 14 hours ago
The winner of the auction is not based on "willingness to risk a win/loss". The auction always ends at an absurdly low price because of the mechanics of the bidding, none of the participants ever drop out, because the price never goes above what they're willing to pay. Please read my comment or the paper again, this is not like an ebay auction at all.

For example, imagine a car auction that lasts only 20 seconds, with a random delay of up to 1 second, and with a very small minimum bid increment, say 2 cents, and no bidding fee or limit on number of bids. Now image 5 different people each outbidding each other by the minimum bid increment every 10 milliseconds. The price will climb by about $2/second, so by the end of auction, the winner will get the car for $40. Because everyone's bidding so fast, and nobody knows exactly when the auction will end, the winner is effectively random. At least on an expected value basis, this is highly beneficial to the participants vs actually bidding up to the true price of the car until other participants are not willing to bid anymore.

[–] rahimnathwani 1 day ago
Tacit collusion wouldn't work in this case, because most rental markets aren't oligopolies.
[–] hluska 16 hours ago
On its own? Of course not. Collusion is much more specific a term than that.
[–] consensus1 23 hours ago
They got a wrist slap because the case was flimsy and probably wouldn't stand up in court. This looks nothing like price fixing and everything like price discovery in an undersupplied market, and the people bringing the case are the same government responsible for the actual problem.
[–] FireBeyond 17 hours ago
The case wasn't even remotely flimsy:

The software literally includes an algorithm that says "this week, you will set the rate for this apartment at $X" based on RP's data.

And, if you want to deviate from that, without being kicked off RP and losing your substantial fee payments, you will follow that rate (and they tell you that they _will_ check), or you can "request an override" from RealPage, that they may allow or deny at their discretion (and RP agents are formally trained that override approvals may not exceed 5% of requests).

> Consistent with their agreement to impose rents generated by RealPage RM Software nearly all the time, Defendants agreed to limit overrides. For example, a RealPage LRO training document states: “Overrides should be few and far between.” Similarly, internal RealPage LRO training documents teach cartel members’ regional managers to beware of “Override Overload” or “rogue” leasing agents who too frequently override the LRO-generated pricing.

> An internal presentation created by Defendant Greystar explicitly acknowledges that RealPage RM Software users should each seek to accept at least 95% of the RealPage-generated prices, emphasizing that “Discipline [o]f using revenue management increases more consistent outcomes.”

> Former Greystar employees have similarly confirmed that negotiating rents other than those set by the RealPage RM Software was unacceptable.

> Even where Participating Landlords do not enable auto-accept, most landlords cannot, on their own, charge rents other than those generated by RealPage’s RM Software— landlords can only “propose an override.” The landlord must then provide a written business justification for why they wish to depart from the RealPage-generated rent.

"Not price fixing", huh?

Just to reiterate that training presentation:

> Discipline [o]f using revenue management increases more consistent outcomes.