Company that makes rent-setting software for landlords sued for collusion

RealPage worked with some of the nation’s largest landlords to raise rents, says lawsuit.

Read the whole story

 

[panderson420]

A lot of people are wondering in the comments if this is illegal or just a innovative use of software.

If you read the pro-publica article, it's clearly collusion.

All these landlords (mostly big companies, but not all of them) are giving their data to an algorithm, and that algorithm tells them what prices they should be selling at.

Now replace the word "algorithm" with "a guy named Bob."

All these landlords are giving their data to a guy named Bob, and Bob is telling them what prices they should be selling at.

If it's illegal for "a guy named Bob" to do then it's also illegal for an algorithm to do.

Agreed.

Which Federal law exactly is Bob violating though?

As far as I'm aware, that would just be called a 'pricing consultant' or a 'pricing analyst' and that is a legal career path with many available jobs as a quick Google search will show.

What is a Pricing Analyst?

A pricing analyst is responsible for analyzing competitor pricing matched with market expectations to determine the ideal target price for products of the business. Duties include providing thorough analytical breakdowns of pricing structures and sales funnels of similar competitor products and services and identifying specific strategies used in pricing models of the same. Reports are written in order to evaluate the findings and to propose the results to the relevant departments for effect. Depending on the company, pricing analysts may progress into managerial roles involving financial account management and analysis.

https://www.glassdoor.com/Job-Descripti ... nalyst.htm

As far as I can tell that is exactly what the software is doing.

Are you saying the entire field is illegal somehow and nobody has noticed, or am I missing your point?

 

[McTurkey]

Hmm what about capping rental prices at 30% of the combined income of the units renters. If you want to charge more, find higher income renters or allow more people on the lease per unit.

Great way to make it so poor people will never be allowed to rent an apartment ever again.

This is pretty much the actual business model of countless "real estate bros" who buy up apartment blocks and then force out the existing tenants through repair neglect and other means in order to get significantly wealthier tenants. There's no regulatory cap, just the practical cap of not being able to charge people more money than they actually make. Which is only a problem if you don't turn units over fast enough to get the desparate high-earners locked in (and even if it takes 2-3 years to flip an entire building, who cares? It's almost all profits anyway, 'cause you bought that place with a stupidly low interest rate and foisted all the utilities onto the new leasees anyway!)

Rent must be capped at some percentage of the median income for an entire area - not just the median of tenants in the building.

 

[Demosthenes642]

The whole legal fig leaf of it being the landlord's choice of how to set rents and not the software is really so much BS. If a landlord is using this service they're likely not doing their own independent research any longer, after all that's why they're paying for the service. That leaves them with the choice of going with the service's suggestion or setting rent in an uninformed way and with the understanding that the software model is going to try and screw them over if they deviate from its suggestion.

The free market solution would simply be for a competitor to develop an equivalent price setting service. This seems like a terrible idea to have a handful of these algorithms turned loose on a market, think HFT flash crashes/spikes but for rents. Human "weakness" can act as a dampener in markets and while not necessarily the most profitable mode of operation it's better for the customers in the end.

 

[Psychophant]

It is an interesting concept. Indirect collusion through a third party. Collusion may not have even been the original intent, but widespread success in the landlord marketplace has made it a fact.

Pretty sure it was the intent. When the software advises you the "suggested rent" based on other rents in the area and strongly advises you don't deviate up or down from the suggested rent that sounds like price fixing as a service.

The company also has pretty weasel word explanation on why it totally isn't price fixing which suggests they knew it would be an issue and took minimalist steps to create some sort of legal plausible deniability "We don't set the rent the employee/user manually does that ... based on the suggested rent based on other rents that we strongly suggest they don't deviate from". See we aren't fixing prices totally not us. There is a whole sperate person clicking the button.

If their algorithm doesn't take into account nonpublic data from other customers when suggesting a rate then it doesn't seem like price fixing. If it does know "since I am going to recommend a 15% price hike to all my customers the same month, vacancy will not increase significantly" then that's fixing. Discovery should be able to sort the truth out fairly easily.

 

[motytrah]

In a whole lot of industries, there is a sort of "soft cartel" anyhow. I mean, I do hope they bust this app and the landlords using it, but. . .

In most industries, there is at the minimum, all participants tracking the pricing of "the market" and raising prices accordingly.

I won't deny there are some industries like that, but I used to work for a company selling a commodity with only a few big vendors, and we tried pushing through price increases combined with a press release announcing the increase to the market. Instead of following our lead, our competitors dropped prices slightly, and we ended up losing 80% of our volume for the quarter. Didn't get it back until we reversed course and dropped prices below where we'd been before the announced price increase. And we had something like 30% market share before the announcement.

There are times when our prices and competitors prices all went up at the same time, but it was usually when someone's plant was down for whatever reason (repairs, normal upkeep, the olympics shuttering plants in china, etc.). Supply/demand economics do still work most of the time.

Airlines and other large businesses often do this sort of price signaling. Southwest will raise (or, less frequently, lower) the price on a given route and wait to see if their competitors match the change in price. If they do, then the new price becomes the new price.

Yeah... and not surprising, the airlines were recently sued for collusion for their ticket fares.

The airline suite from 2018 was more about shaping supply to juice prices. Which is a bit different from sharing the proprietary pricing data of actually leased rates. If anything it's worse, because the airlines were using press releases to publicly signal intentions. That at least gives them an arms length argument. The landlords are going to have a much more difficult time at this.

 

[DarthSlack]

A lot of people are wondering in the comments if this is illegal or just a innovative use of software.

If you read the pro-publica article, it's clearly collusion.

All these landlords (mostly big companies, but not all of them) are giving their data to an algorithm, and that algorithm tells them what prices they should be selling at.

Now replace the word "algorithm" with "a guy named Bob."

All these landlords are giving their data to a guy named Bob, and Bob is telling them what prices they should be selling at.

If it's illegal for "a guy named Bob" to do then it's also illegal for an algorithm to do.

Agreed.

Which Federal law exactly is Bob violating though?

As far as I'm aware, that would just be called a 'pricing consultant' or a 'pricing analyst' and that is a legal career path with many available jobs as a quick Google search will show.

What is a Pricing Analyst?

A pricing analyst is responsible for analyzing competitor pricing matched with market expectations to determine the ideal target price for products of the business. Duties include providing thorough analytical breakdowns of pricing structures and sales funnels of similar competitor products and services and identifying specific strategies used in pricing models of the same. Reports are written in order to evaluate the findings and to propose the results to the relevant departments for effect. Depending on the company, pricing analysts may progress into managerial roles involving financial account management and analysis.

https://www.glassdoor.com/Job-Descripti ... nalyst.htm

As far as I can tell that is exactly what the software is doing.

Are you saying the entire field is illegal somehow and nobody has noticed, or am I missing your point?

If everyone is using the same consultant, yeah, the same price fixing and collusion arguments would apply.

 

[Statistical]

It is an interesting concept. Indirect collusion through a third party. Collusion may not have even been the original intent, but widespread success in the landlord marketplace has made it a fact.

Pretty sure it was the intent. When the software advises you the "suggested rent" based on other rents in the area and strongly advises you don't deviate up or down from the suggested rent that sounds like price fixing as a service.

The company also has pretty weasel word explanation on why it totally isn't price fixing which suggests they knew it would be an issue and took minimalist steps to create some sort of legal plausible deniability "We don't set the rent the employee/user manually does that ... based on the suggested rent based on other rents that we strongly suggest they don't deviate from". See we aren't fixing prices totally not us. There is a whole sperate person clicking the button.

If their algorithm doesn't take into account nonpublic data from other customers when suggesting a rate then it doesn't seem like price fixing. If it does know "since I am going to recommend a 15% price hike to all my customers the same month, vacancy will not increase significantly" then that's fixing. Discovery should be able to sort the truth out fairly easily.

The company admits (brags) it uses non-public data. It uses actual rents paid, vacancy rates, and future lease termination dates not just advertised rents which is why companies should use it over their own adhoc investigations on competitors rents.

Lanlord A can get some public visibility into prices of Landlord B by browsing listings, making inquiries etc but it can't get full data like actual paid rents (which can be at a discount to advertised rates in a supply glut), current vacancy counts, and lease termination dates. How this services works is Landlord A gives up that data to use the service which means in turn so does Landlord B. Now the service has visibility that no single landlord could have on their own. Using that non-public data it can ensure both Landlord A & B can extort the max price fixed price from renters.

The more landlords that join the more powerful the service becomes. Effectively there aren't 10 landlords controlling 90% of the rental units in a city (which would be bad enough) there is only a single quasi monopoly which controls 90% of the units.

 

[smammy]

I absolutely can't wait for discovery on this.

 

[J42]

One thing is that for a while, people were blaming tech companies until others were going "um... they aren't the ones that set the rent price. You should protest in front of this Real Estate Trust's HQ instead". I saw less blaming of companies like Google after that

Companies are building only luxury apartments if they can get away with it. Housing seem like the theory behind NFTs. Scarcity lets you charge high prices

 

[penumbra]

I can see this lawsuit having NO /b standing based on how many regular people it's screwed over.

TFTFY

 

[JPMeyer]

This one will definitely end up going to the California Supreme Court. I doubt that it becomes a federal case though; if all of the landlords' properties are in Sacramento (as implied in the article), then interstate commerce isn't involved.

IMHO, it is collusion and should be against the law. Whether or not it will be found to be collusion and against the law is a toss-up at this point, given the quality of some of the judges on the bench.

The article states that this suit was filed the US District Court in San Diego and makes claims under federal antitrust laws, so I doubt that this will end up in the CA Supreme Ct!

The issue of whether rent rate collusion impacts interstate commerce (and thus implicates a Sherman Act per se price fixing claim) is an interesting one. There certainly ARE rental markets that directly involve interstate commerce (NY/NJ, Philadelphia and Chicago come to mind), but the choice to file the suit in San Diego is a bit perplexing, from this viewpoint.

The line between price fixing and information sharing has always been difficult to navigate. This one certainly has many attributes of classic price fixing but without the explicit agreement to follow the algorithm's recommendations. I'm going to have to read the complaint to see how the smart folks who drafted the complaint propose to convince a judge to let this case move forward. It will certainly be hard fought from the defendants' perspective!

 

[marmelade]

This app certainly doesn’t help, but housing becoming a speculative asset to put money in and not a roof over your head is what caused this.

Break the big conglomerates and ban things like hotel houses and that will also help a lot.

Becoming? Try "Is." Zoning. Homeowner Associations. Everything is designed to boost property values. Property investment is one of the few remaining areas where complete idiots can, at a minimum, ensure a comfortable retirement, and, at the other end, buy a Presidency.

Many of our political problems involve property developers earning mostly undeserved income, then spending that money to cement their investments through regulatory changes at the local, state, and Federal levels. If not directly, then through their wives (cf. recent California senators and representatives), PACs, etc.

That's all one reason why the "house the homeless" campaigns are so idiotic. They're a bandaid on a much deeper, intrinsic problem in our society, one which apparently nobody wishes to confront. If the market is diluted, property values go down. So there might be feel-good "affordable housing" efforts, but they can be guaranteed not to adjust those property values. If we implement rent controls, we create slums. And on and on.

We need to rethink fundamental propositions on development. But it will never happen. Too many low-level investors are in on the racket. Instead we'll see band-aid after band-aid.

The one hopeful thing I can see is that MAYBE the market will come to bear and these large capital firms won't get the ROI they expect. A recession could do that.

 

[xaxxon]

If all the information was flowing one direction, then this doesn't seem illegal, just shitty.

If information was flowing back up to app company or sideways (rental companies agreeing with each other to use this app) then that's obviously super illegal.

 

[MMarsh]

It is an interesting concept. Indirect collusion through a third party. Collusion may not have even been the original intent, but widespread success in the landlord marketplace has made it a fact.

Pretty sure it was the intent. When the software advises you the "suggested rent" based on other rents in the area and strongly advises you don't deviate up or down from the suggested rent that sounds like price fixing as a service.

The company also has pretty weasel word explanation on why it totally isn't price fixing which suggests they knew it would be an issue and took minimalist steps to create some sort of legal plausible deniability "We don't set the rent the employee/user manually does that ... based on the suggested rent based on other rents that we strongly suggest they don't deviate from". See we aren't fixing prices totally not us. There is a whole sperate person clicking the button.

Exactly. I believe the technical term is a "Ted Gate", thanks to good ol' Weinersmith:
https://www.smbc-comics.com/comic/in-the-loop

I once asked the Competition Bureau in Canada what they thought of the price-fixing between our two-and-a-half big telecoms, after the fifth time in a year when they all made identical price-hike announcements on the same service tiers on the same day. The response was "well, can you provide us a copy of the minutes of the meeting where the price-fixing decision was made?"

There was another case where some gas station owners got busted for collusion during a brief window, because they made the mistake of writing it down that time, but during the period where they were just phoning each other to confirm the day's price there was nothing the Bureau could do.

In other words: no meeting minutes, no cartel collusion

 

[MMarsh]

(edit - deleted)

 

[brewejon]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

 

[HiredGoons]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

Zoning laws are one of the biggest problems. Soviet Russia got a lot of things wrong, but they actually did housing pretty smartly. Lots of dense mass developments with accessible transportation to city centers are the way to go. Single family housing is a wasteful use of land that creates artificial scarcity when we could be building apartments instead.

 

[ORcoder]

Talk about “rent seeking behavior”

 

[JPMeyer]

Once again, I should have read the complaint before posting my reply to JohnDeL above! It appears that there actually IS an explicit agreement to follow the algorithm's pricing recommendations. At least if the complaint is correct:

"If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required. But RealPage emphasizes the need for discipline among participating Lessors and urges them that for its coordinated algorithmic pricing to be the most successful in increasing rents, participating Lessors must adopt RealPage’s pricing at least 80% of the time. "

Also, the firm representing the plaintiff's has some heavyweight antitrust/economics (incl TWO PhDs!) lawyers on board. I think that I'll buy some popcorn; this one should be fun to watch!

 

[azazel1024]

This seems similar to "On a computer" patents.

If the property owners/managers got in a room to share private data used for pricing, it would clearly be illegal, but since it's done on a computer owned by a third party it somehow becomes ok.

Yeah, that last part is where my brain goes, "well that sounds like collusion".

One thing to be aggregating and using publicly available data to set rents. Another when it is private data from the landlords.

Taking a look at your competitors is a "duh" situation. Most anyone with a couple of brain cells will check the going market rate of any product or service before offering it. But checking competitor's private information...

That is something different.

And those landlords sharing the data with only select others also screams collusion. It would be one thing if they were all sharing it publicly so anyone could see it.

 

[rosen380]

Hmm what about capping rental prices at 30% of the combined income of the units renters. If you want to charge more, find higher income renters or allow more people on the lease per unit.

Great way to make it so poor people will never be allowed to rent an apartment ever again.

Rent must be capped at some percentage of the median income for an entire area - not just the median of tenants in the building.

I think that still doesn't work since it isn't like every complex is the same.

If an 800 square foot apartment in a complex with minimal amenities is renting at the cap then what happens to your 1200 square foot units in the same complex? That one should be worth more, but you'd be capped and have to rent it at the same price.

And then what about the complex across the street that also has a 1200 square foot apartment, but they have a pool and a gym and tennis courts and covered parking modern updated appliances and in-unit laundry and EV charging, etc? Clearly this one is worth even more, but nope, at the cap so it is the same price as the bare-bones 800 square foot place.

 

[azazel1024]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

An issue with that is huge areas are primarily vacation areas. I absolutely understand that can drive up locals housing prices and rental rates a ton. And that is an issue. But there is only a local economy and a reason for a lot of people to live there, because it is a vacation destination. And thus most people who own property own it only to vacation there. Or to rent it to others who want to vacation there. I am not sure how you fix that.

On other markets, I think the only way to fix lots of people being landlords and renting places out, would be that the government needs to step in and help people buy a property. Otherwise even if you limited ownership to get rid of landlords, vastly cratering housing prices, many of the people who rent, still couldn't own. They don't have the liquid funds for a mortgage and closing costs, or they don't have the credit, etc.

And I guess you could reform those markets to get rid of things like credit. But that also drives up loan costs for everyone else if you get rid of anything to look at to see how likely someone is to be able to pay back the loan they've taken out.

Etc.

 

[crmarvin42]

A lot of people are wondering in the comments if this is illegal or just a innovative use of software.

If you read the pro-publica article, it's clearly collusion.

All these landlords (mostly big companies, but not all of them) are giving their data to an algorithm, and that algorithm tells them what prices they should be selling at.

Now replace the word "algorithm" with "a guy named Bob."

All these landlords are giving their data to a guy named Bob, and Bob is telling them what prices they should be selling at.

If it's illegal for "a guy named Bob" to do then it's also illegal for an algorithm to do.

Agreed.

Which Federal law exactly is Bob violating though?

As far as I'm aware, that would just be called a 'pricing consultant' or a 'pricing analyst' and that is a legal career path with many available jobs as a quick Google search will show.

What is a Pricing Analyst?

A pricing analyst is responsible for analyzing competitor pricing matched with market expectations to determine the ideal target price for products of the business. Duties include providing thorough analytical breakdowns of pricing structures and sales funnels of similar competitor products and services and identifying specific strategies used in pricing models of the same. Reports are written in order to evaluate the findings and to propose the results to the relevant departments for effect. Depending on the company, pricing analysts may progress into managerial roles involving financial account management and analysis.

https://www.glassdoor.com/Job-Descripti ... nalyst.htm

As far as I can tell that is exactly what the software is doing.

Are you saying the entire field is illegal somehow and nobody has noticed, or am I missing your point?

If everyone is using the same consultant, yeah, the same price fixing and collusion arguments would apply.

This has existed in the poultry industry for decades in a company called AgriStats.

All (or close enough as makes no difference) poultry integrators have outsourced data collation and analysis to AgriStats. Everything from placement of eggs in the hatchery, to ingredient buys for feed during live production, to the price they pay for styrofoam pads for packages of chicken breasts are reported to Agristats from all companies every week. That doesn't bother me so much as the fact that then publish an ostensibly anonymized (but not really anonymous at all) bench mark with the data for all of your competitors summarized alongside yours.

If what the poultry industry is doing is legal (something that is actually being litigated at the moment after decades of being ignored) then what this algorithm is described as doing would also be legal (though I don't like it, and feel that it shouldn't be legal). So far, they've not lost in court, though they have settled a few times.

Subway v. Agristats
List of recent antitrust settlements involving Agristats

 

[azazel1024]

Hmm what about capping rental prices at 30% of the combined income of the units renters. If you want to charge more, find higher income renters or allow more people on the lease per unit.

Great way to make it so poor people will never be allowed to rent an apartment ever again.

Rent must be capped at some percentage of the median income for an entire area - not just the median of tenants in the building.

I think that still doesn't work since it isn't like every complex is the same.

If an 800 square foot apartment in a complex with minimal amenities is renting at the cap then what happens to your 1200 square foot units in the same complex? That one should be worth more, but you'd be capped and have to rent it at the same price.

And then what about the complex across the street that also has a 1200 square foot apartment, but they have a pool and a gym and tennis courts and covered parking modern updated appliances and in-unit laundry and EV charging, etc? Clearly this one is worth even more, but nope, at the cap so it is the same price as the bare-bones 800 square foot place.

You could probably figure out some method to work out rent control rates based on the size and location of an apartment. But you'd likely need to do it within metropolitan areas and/or cities. I think it would break down fast outside of that.

But if it is set to something like $300 + $2 per sq-ft x (1 - .1 x miles from city center) that might be something sort of workable. No it doesn't end up accommodating for amenities. How nice is the apartment itself, etc. But how nice a place is will attract more people and keep occupancy rates high. Places that aren't as nice the try to price at the max rent control rate are going to have a hard time keeping occupancy if everyone is looking at the nicer places and trying to get in there.

You could also likely allow some things like RENT is controlled, but if you want access to the pool and gym in the building, that is an extra $150 a month. Want parking to go with your apartment? That is $200 a month. Etc.

 

[ikith]

Knowing how the US works when it comes to stuff like this, nothing is going to happen.

Don't get me wrong, I hope something DOES come of this, but, I know nothing will.

Probably a slap on the wrist, with a "STOP IIIIT" with a small fine not even worth 1% of their income and then life goes on, they might be forced to rebrand/rename to avoid the small negative back lash but that's the worst case scenario.

 

[Jeff S]

A lot of people are wondering in the comments if this is illegal or just a innovative use of software.

If you read the pro-publica article, it's clearly collusion.

All these landlords (mostly big companies, but not all of them) are giving their data to an algorithm, and that algorithm tells them what prices they should be selling at.

Now replace the word "algorithm" with "a guy named Bob."

All these landlords are giving their data to a guy named Bob, and Bob is telling them what prices they should be selling at.

If it's illegal for "a guy named Bob" to do then it's also illegal for an algorithm to do.

Agreed.

Which Federal law exactly is Bob violating though?

As far as I'm aware, that would just be called a 'pricing consultant' or a 'pricing analyst' and that is a legal career path with many available jobs as a quick Google search will show.

What is a Pricing Analyst?

A pricing analyst is responsible for analyzing competitor pricing matched with market expectations to determine the ideal target price for products of the business. Duties include providing thorough analytical breakdowns of pricing structures and sales funnels of similar competitor products and services and identifying specific strategies used in pricing models of the same. Reports are written in order to evaluate the findings and to propose the results to the relevant departments for effect. Depending on the company, pricing analysts may progress into managerial roles involving financial account management and analysis.

https://www.glassdoor.com/Job-Descripti ... nalyst.htm

As far as I can tell that is exactly what the software is doing.

Are you saying the entire field is illegal somehow and nobody has noticed, or am I missing your point?

My understanding of a pricing analyst is they only work with one company. They analyze publicly available data (e.g. apartment listings on websites) and recommend a price for the company they work for.

However, when a bunch of companies all give their info to Bob and say, tell us what price to set at. . . that sure sounds like illegal price fixing.

Part of what makes this illegal is a tacit agreement that everyone will set the price at the price Bob tells them to do.

With the "soft cartel" based on "market price" where everyone has their own price analyst, you are guessing what your competitors will price at. You could tomorrow raise your price, and someone else simultaneously lowers their price and undercuts you.

Or, they see you raised your price, and decide for market advantage to slightly lower their price to capture market share. That is, they independently decide their price strategy.

With a scheme like this, everyone is agreeing to fix the prices at whatever bob/algorithm tells them too. Collusion.

 

[watermeloncup]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

Zoning laws are one of the biggest problems. Soviet Russia got a lot of things wrong, but they actually did housing pretty smartly. Lots of dense mass developments with accessible transportation to city centers are the way to go. Single family housing is a wasteful use of land that creates artificial scarcity when we could be building apartments instead.

Yeah, Soviet urban planning often followed a concept very similar to the modern idea of Super Blocks, where multiple blocks are combined together with vehicle access only on the periphery. This created a pleasant semi-parkland right outside the front door of each building. Basic services were also provided within walking distance, making them a very convenient place to live. In addition, I think there's something to learn about how the Soviet planners were able to build an extremely large amount of relatively high quality housing for a low amount of money. City Beautiful had a video on Soviet urban planning that covers this pretty well.

That said, I think in a free country like the US, there should be difference choices for housing, including single family homes. I just don't think that single family homes should be the only thing that's allowed to be built (the opposite of choice).

edit: typo

 

[Jeff S]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

Zoning laws are one of the biggest problems. Soviet Russia got a lot of things wrong, but they actually did housing pretty smartly. Lots of dense mass developments with accessible transportation to city centers are the way to go. Single family housing is a wasteful use of land that creates artificial scarcity when we could be building apartments instead.

Yeah, Soviet urban planning often followed a concept very similar to the modern idea of Super Blocks, where multiple blocks are combined together with vehicle access only on the periphery. This created a pleasant semi-parkland right outside the front door of each building. Basic services were also provided within walking distance, making them a very convenient place to live. In addition, I think there's something to learn about how the Soviet planners were able to build an extremely large amount of relatively high quality housing for a low amount of money. City Beautiful had a video on Soviet urban planning that coverts this pretty well.

That said, I think in a free country like the US, there should be difference choices for housing, including single family homes. I just don't think that single family homes should be the only thing that's allowed to be built (the opposite of choice).

One thing American planners have to do if building a superblock that Soviets didn't worry so much about is ensuring adequate parking spaces (e.g. in a separate parking garage, or parking lot, etc).

Not so many people had cars in the Soviet Union (yes, I know there WERE cars in the Soviet Union, but my understanding is that only the 'elite' approx 10-15% of people in the Party had the cars). Everyone else walked, rode a bike, or took public transit, no?

 

[mgforbes]

One significant difference I see is that collusion and price fixing in the retail arena (fuel, food, consumer goods) has a different time scale than price fixing in the rental market. Leases are a long-term commitment, and even renting month-to-month carries a huge overhead cost for moving. Fuel prices are posted, and buyers can choose the most convenient location or the cheapest one, with only a short-term disadvantage for a suboptimal choice.

Food may be less so, but there are still plenty of choices. You can buy less expensive cuts of meat, or choose foods which are lower in cost but satisfy the need for calories to survive. Maybe not as desirable, but there are choices. Consumer goods can be deferred if prices are too high.

Housing isn't a case where you have lots of choices (to be housed, or not to be housed) and you're signing up for a significant time period. The contrary case would be renting a hotel room by the night, but the cost of that is far beyond the rental cost of a permanent dwelling, assuming a hotel would even be willing to rent long-term.

 

[graylshaped]

This app certainly doesn’t help, but housing becoming a speculative asset to put money in and not a roof over your head is what caused this.

Break the big conglomerates and ban things like hotel houses and that will also help a lot.

Frankly, I'd go even further with single-family homes and make it ruinously expensive to own a house you don't live in. Eliminate the so-called passive-income aspect of home ownership and you get rid of landlords sitting on properties for years and letting them slowly decay until they can't squeeze any more money out of them. It'd be a lot easier for folks who just need a place to live if the market wasn't artificially inflated to suit the whims of capital.

I'll admit I don't have as neat a solution for apartments, and I think there should probably be some sort of rental market, but at the end of the day I think we, as a society, are going to have to start treating housing more like a right than a privilege before any of this gets meaningfully sorted out.

Personally, I like doubling your property taxes for every home you own that you don’t live in 8 months out of the year.

In the case of apartment buildings/complexes, the entire building counts as a single unit for the doubling, but C-level execs (or the appropriate parallel) living in a building 8+ months reduce the unit count by 1 to a minimum of 1.

Own six apartment complexes in Detroit and live in a house in Ann Arbor?

Your home = property taxes x1
Apt 1 = x2
Apt 2 = x4
Apt 3 = x8
Etc

Sounds good, except we own a condo we "lease" to my mother-in-law. Her rent is about ten percent of what we pay, because that is what she can afford.

My parents have a similar situation where they rent a house to my step sister for their mortgage payment.

My fantasy legislation is open to some amendments re: family members, charity, and the like.

I've stopped tracking our costs, because she will never pay us enough for the tax implications to manifest. The good news is that she is 40 minutes closer to us, and can walk to our house if she wants her grandson fix. We also bought at a time when the mortgage was about a thousand dollars less than rent on a similar apartment. HOA fees cut that in half, but her quality of life has improved. Prior to moving, my wife would need to go to the hospital with her every other month or so. There have been no such trips since she moved closer to us.

 

[watermeloncup]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

Zoning laws are one of the biggest problems. Soviet Russia got a lot of things wrong, but they actually did housing pretty smartly. Lots of dense mass developments with accessible transportation to city centers are the way to go. Single family housing is a wasteful use of land that creates artificial scarcity when we could be building apartments instead.

Yeah, Soviet urban planning often followed a concept very similar to the modern idea of Super Blocks, where multiple blocks are combined together with vehicle access only on the periphery. This created a pleasant semi-parkland right outside the front door of each building. Basic services were also provided within walking distance, making them a very convenient place to live. In addition, I think there's something to learn about how the Soviet planners were able to build an extremely large amount of relatively high quality housing for a low amount of money. City Beautiful had a video on Soviet urban planning that coverts this pretty well.

That said, I think in a free country like the US, there should be difference choices for housing, including single family homes. I just don't think that single family homes should be the only thing that's allowed to be built (the opposite of choice).

One thing American planners have to do if building a superblock that Soviets didn't worry so much about is ensuring adequate parking spaces (e.g. in a separate parking garage, or parking lot, etc).

Not so many people had cars in the Soviet Union (yes, I know there WERE cars in the Soviet Union, but my understanding is that only the 'elite' approx 10-15% of people in the Party had the cars). Everyone else walked, rode a bike, or took public transit, no?

True, high parking requirements would reduce the viability of the concept. A lot of these buildings do have parking, but probably not enough to support US levels of car ownership and I suspect that a lot of it was added after the fact. Parking is the enemy of density, or at least density at a reasonable cost. Parking could be built into the lower levels of residential towers (used to live in a building like this, first 6 floors of 25 were almost all parking), but this would of course raise the cost. So the concept would probably make the most sense in dense urban areas with relatively low levels of car ownership.

 

[whobeme]

It is an interesting concept. Indirect collusion through a third party. Collusion may not have even been the original intent, but widespread success in the landlord marketplace has made it a fact.

Similar in a way to how SCOTUS is rapidly creating a state religion by allowing the "religious freedoms" of employers to be forced on their workers through health coverage restrictions. This follows because in the US dollars are fungible but employer provided health care is not. This is why employers should only be allowed pay employees ("compensation") and not also provide "coverage" (in the bizarre usage of the US Government, as it applies to health care). They are both a form of pay, with the latter not being taxed. "Coverage" was always bad economics and labor policy, and now there may also be some terrible strings attached if a person works for the wrong business.

 

[Longmile149]

This app certainly doesn’t help, but housing becoming a speculative asset to put money in and not a roof over your head is what caused this.

Break the big conglomerates and ban things like hotel houses and that will also help a lot.

Frankly, I'd go even further with single-family homes and make it ruinously expensive to own a house you don't live in. Eliminate the so-called passive-income aspect of home ownership and you get rid of landlords sitting on properties for years and letting them slowly decay until they can't squeeze any more money out of them. It'd be a lot easier for folks who just need a place to live if the market wasn't artificially inflated to suit the whims of capital.

I'll admit I don't have as neat a solution for apartments, and I think there should probably be some sort of rental market, but at the end of the day I think we, as a society, are going to have to start treating housing more like a right than a privilege before any of this gets meaningfully sorted out.

Personally, I like doubling your property taxes for every home you own that you don’t live in 8 months out of the year.

In the case of apartment buildings/complexes, the entire building counts as a single unit for the doubling, but C-level execs (or the appropriate parallel) living in a building 8+ months reduce the unit count by 1 to a minimum of 1.

Own six apartment complexes in Detroit and live in a house in Ann Arbor?

Your home = property taxes x1
Apt 1 = x2
Apt 2 = x4
Apt 3 = x8
Etc

Sounds good, except we own a condo we "lease" to my mother-in-law. Her rent is about ten percent of what we pay, because that is what she can afford.

My parents have a similar situation where they rent a house to my step sister for their mortgage payment.

My fantasy legislation is open to some amendments re: family members, charity, and the like.

I've stopped tracking our costs, because she will never pay us enough for the tax implications to manifest. The good news is that she is 40 minutes closer to us, and can walk to our house if she wants her grandson fix. We also bought at a time when the mortgage was about a thousand dollars less than rent on a similar apartment. HOA fees cut that in half, but her quality of life has improved. Prior to moving, my wife would need to go to the hospital with her every other month or so. There have been no such trips since she moved closer to us.

I bet the stress reductions from the alleviated financial burden, isolation, and looming loss of independence have been huge. I’m really glad.

The house my stepsister is renting from my folks is the one we lived in as kids. My dad and his wife bought my stepmom’s brothers: house from his estate when he died, but they couldn’t sell the old house because the 08 bubble popping put them underwater on it. My stepsister and her husband couldn’t get approved for a mortgage and the rents for a similar home were almost double, so they basically just took over the payments. When it’s paid off, the plan is to sign it over to them.

If they didn’t have that available, they’d probably have been homeless a long time ago.

The entire housing market is deeply, deeply fucked up because of the investment mentality that landlords and property rental companies have.

 

[Jeff S]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

Zoning laws are one of the biggest problems. Soviet Russia got a lot of things wrong, but they actually did housing pretty smartly. Lots of dense mass developments with accessible transportation to city centers are the way to go. Single family housing is a wasteful use of land that creates artificial scarcity when we could be building apartments instead.

Yeah, Soviet urban planning often followed a concept very similar to the modern idea of Super Blocks, where multiple blocks are combined together with vehicle access only on the periphery. This created a pleasant semi-parkland right outside the front door of each building. Basic services were also provided within walking distance, making them a very convenient place to live. In addition, I think there's something to learn about how the Soviet planners were able to build an extremely large amount of relatively high quality housing for a low amount of money. City Beautiful had a video on Soviet urban planning that coverts this pretty well.

That said, I think in a free country like the US, there should be difference choices for housing, including single family homes. I just don't think that single family homes should be the only thing that's allowed to be built (the opposite of choice).

One thing American planners have to do if building a superblock that Soviets didn't worry so much about is ensuring adequate parking spaces (e.g. in a separate parking garage, or parking lot, etc).

Not so many people had cars in the Soviet Union (yes, I know there WERE cars in the Soviet Union, but my understanding is that only the 'elite' approx 10-15% of people in the Party had the cars). Everyone else walked, rode a bike, or took public transit, no?

True, high parking requirements would reduce the viability of the concept. A lot of these buildings do have parking, but probably not enough to support US levels of car ownership and I suspect that a lot of it was added after the fact. Parking is the enemy of density, or at least density at a reasonable cost. Parking could be built into the lower levels of residential towers (used to live in a building like this, first 6 floors of 25 were almost all parking), but this would of course raise the cost. So the concept would probably make the most sense in dense urban areas with relatively low levels of car ownership.

I wonder, if it would be cheaper, instead of building, say, whatever 6 residential buildings with a parking garage under all the buildings. . . to build 5 residential buildings and 1 parking garage tower in the space where the 6th would have been (Now, you might object that you are losing an entire residential tower, but you are gaining however many additional levels of residential units in the buildings where you are NOT putting parking underneath them, so seems like a wash).

You could then go so far as to connect the parking garage to the other buildings with an underground tunnel, or maybe 2nd or 3rd story covered, climate controlled bridge-walkways (in cities, office building complexes sometimes do things like this).

 

[countcracula]

Third set of reactions: Is this actually an anti-trust matter? Where does the line between market research and backchannel collusion begin and end for 3rd-party providers like this? How much power do their purchasers have to influence rent prices in the market (illegal), rather than just maximize profit for themselves (not illegal)? What other software out there is recommending pricing to multiple platforms, and how does that inform this case?
I don't know these answers (not a lawyer), but I'm treating this issue like I treat most any politician talking about the 1st Amendment: very, very carefully.

What's kind of terrifying about it is the private data sharing. Don't know for sure but what if, you are a renter, and your landlord says "hey sign this updated lease, your rent is going up $100 a month." You then decide, I am going to go see what else is out there, I can't abide, I need to move. Other properties not even owned by the same overarching company all trading data about rent prices, and POSSIBLY also who their tenants are. So you fill out a required application just for consideration or to join some kind of wait list, and BAM! You come up on an internal private list of existing renters along with your current rent and square footage. Then these other companies can decide, hmmm, I can lease to you for +$95 or some other amount that is not really based in anything other than what your current rent is. So you're just stuck. You pay the extra $100 a month whether you move or don't. Seems shitty to me.

 

[_GntlStone_]

This app certainly doesn’t help, but housing becoming a speculative asset to put money in and not a roof over your head is what caused this.

Break the big conglomerates and ban things like hotel houses and that will also help a lot.

Frankly, I'd go even further with single-family homes and make it ruinously expensive to own a house you don't live in. Eliminate the so-called passive-income aspect of home ownership and you get rid of landlords sitting on properties for years and letting them slowly decay until they can't squeeze any more money out of them. It'd be a lot easier for folks who just need a place to live if the market wasn't artificially inflated to suit the whims of capital.

I'll admit I don't have as neat a solution for apartments, and I think there should probably be some sort of rental market, but at the end of the day I think we, as a society, are going to have to start treating housing more like a right than a privilege before any of this gets meaningfully sorted out.

Personally, I like doubling your property taxes for every home you own that you don’t live in 8 months out of the year.

In the case of apartment buildings/complexes, the entire building counts as a single unit for the doubling, but C-level execs (or the appropriate parallel) living in a building 8+ months reduce the unit count by 1 to a minimum of 1.

Own six apartment complexes in Detroit and live in a house in Ann Arbor?

Your home = property taxes x1
Apt 1 = x2
Apt 2 = x4
Apt 3 = x8
Etc

Sounds good, except we own a condo we "lease" to my mother-in-law. Her rent is about ten percent of what we pay, because that is what she can afford.

My parents have a similar situation where they rent a house to my step sister for their mortgage payment.

My fantasy legislation is open to some amendments re: family members, charity, and the like.

I've stopped tracking our costs, because she will never pay us enough for the tax implications to manifest. The good news is that she is 40 minutes closer to us, and can walk to our house if she wants her grandson fix. We also bought at a time when the mortgage was about a thousand dollars less than rent on a similar apartment. HOA fees cut that in half, but her quality of life has improved. Prior to moving, my wife would need to go to the hospital with her every other month or so. There have been no such trips since she moved closer to us.

Worst come to worst, you could always put her name on the deed or put it into a family trust with succession provisions, and still pay the costs.

 

[CaptainPiccard]

This seems similar to "On a computer" patents.

If the property owners/managers got in a room to share private data used for pricing, it would clearly be illegal, but since it's done on a computer owned by a third party it somehow becomes ok.

From tfa:

But Maureen K. Ohlhausen, who was then the acting chair of the Federal Trade Commission, said in a 2017 talk that it could be problematic if a group of competitors all used the same outside firm’s algorithm to maximize prices across a market.

She suggested substituting “a guy named Bob” everywhere the word algorithm appears.

“Is it OK for a guy named Bob to collect confidential price strategy information from all the participants in a market and then tell everybody how they should price?” she said. “If it isn’t OK for a guy named Bob to do it, then it probably isn’t OK for an algorithm to do it either.”

 

[janhec]

This appears very much like the inevitable bankruptcy of (unchecked) economics. The virtue of making money, supposedly driving wealth permeating the community, has become the enemey of this greater good by severely reducing the spending power of a large segment of the community.
In other words we can call this greed that kills the hoped for proces, and produces bad actors
at a rate far greater than ever imagined, which makes the system effectively defenseless.
An other way of looking broadly at these developments is to notice that in a stage of renewal (in basic history, the evolution of the economic system as we know it), competition will often work towards the greater good, but when the stage of mere management arrives, it is time for robbers, gamblers and other bad actors who can only be scavengers.
Obviously, then, we need controls, but that is only a basic response, as one would wish controls of 'ripe' (or rotten) markets might work towards a (new ) stage of renewal. Like durable energy etc., which has been really hampered to get a footing in spite of subsidies and grandiose marketing.
We haven't found a follow up to the naive and ultimately insincere belief that the economy will rule itself.
Though no gods are mentioned, this is the plainest of superstitions.
Basically, we need to invent feasible answers to today's problems, and this takes time. Older solar panels really were not all that good. Perhaps invention and development time can no longer catch up with the speed at which we make problems and need to have them solved.

 

[watermeloncup]

Just another example reason - housing should not be a commodity. You don't even have to make it one-property per person, property can stay in the market. Just limit both businesses and people to a couple of houses max.

Zoning laws are one of the biggest problems. Soviet Russia got a lot of things wrong, but they actually did housing pretty smartly. Lots of dense mass developments with accessible transportation to city centers are the way to go. Single family housing is a wasteful use of land that creates artificial scarcity when we could be building apartments instead.

Yeah, Soviet urban planning often followed a concept very similar to the modern idea of Super Blocks, where multiple blocks are combined together with vehicle access only on the periphery. This created a pleasant semi-parkland right outside the front door of each building. Basic services were also provided within walking distance, making them a very convenient place to live. In addition, I think there's something to learn about how the Soviet planners were able to build an extremely large amount of relatively high quality housing for a low amount of money. City Beautiful had a video on Soviet urban planning that coverts this pretty well.

That said, I think in a free country like the US, there should be difference choices for housing, including single family homes. I just don't think that single family homes should be the only thing that's allowed to be built (the opposite of choice).

One thing American planners have to do if building a superblock that Soviets didn't worry so much about is ensuring adequate parking spaces (e.g. in a separate parking garage, or parking lot, etc).

Not so many people had cars in the Soviet Union (yes, I know there WERE cars in the Soviet Union, but my understanding is that only the 'elite' approx 10-15% of people in the Party had the cars). Everyone else walked, rode a bike, or took public transit, no?

True, high parking requirements would reduce the viability of the concept. A lot of these buildings do have parking, but probably not enough to support US levels of car ownership and I suspect that a lot of it was added after the fact. Parking is the enemy of density, or at least density at a reasonable cost. Parking could be built into the lower levels of residential towers (used to live in a building like this, first 6 floors of 25 were almost all parking), but this would of course raise the cost. So the concept would probably make the most sense in dense urban areas with relatively low levels of car ownership.

I wonder, if it would be cheaper, instead of building, say, whatever 6 residential buildings with a parking garage under all the buildings. . . to build 5 residential buildings and 1 parking garage tower in the space where the 6th would have been (Now, you might object that you are losing an entire residential tower, but you are gaining however many additional levels of residential units in the buildings where you are NOT putting parking underneath them, so seems like a wash).

You could then go so far as to connect the parking garage to the other buildings with an underground tunnel, or maybe 2nd or 3rd story covered, climate controlled bridge-walkways (in cities, office building complexes sometimes do things like this).

That seems like a reasonable, practical idea that recognizes that the US is very car-centric, so a lot of people will have cars. It certainly beats covering the free space with surface parking lots. There's a lot that can be done that would be better than what we have now, even if it's not the ideal situation for urbanists.

 

[Bernardo Verda]

Many commenters significantly overestimate the Federal judiciary's appetite for nuanced anti-trust/anti-competative behavior suits. The Federal judiciary is packed to the gills with former white-shoe corporate lawyers who (while not bought, per se) are mighty skeptical of claims of market rigging in anything more than cartoon handshake and briefcase of money scenarios.

There has been a 40+ year non-interference paradigm in market regulation, and Real Page's attorney's know it. Even within the FTC, many rank-and-file staff are true believers in "let the market sort it out".

In short, your thirst for justice will likely be un-slaked.

That shit-eating grin you can absolutely hear in their statements is them taunting the rest of us plebeian clowns by explaining "yes we're absolutely violating the spirit of anti-competative behavior laws, but not the current very narrow interpretation of the letter of that law. Even if a lower court judge nails us, SCOTUS is essentially the high-council of fucking over regular people, so....good luck losers."

In any case, this app doesn't do shit in a highly fragmented environment. As markets concentrate into smaller groups of bigger and bigger players, the likelyhood that someone will decide to go rogue from a tacitly accepted pricing scheme drops significantly.

Slate: June 29 2018: A New Lochner Era

In the early 20th century, the Supreme Court systematically gutted regulations to favor business and attack organized labor. Those dark days have returned.