US sues RealPage, claims rental-pricing algorithm used by landlords is illegal
- Thread starter JournalBot
- Start date
Seems like a conflict of logic if realpage is enforcing what prices landlords set, at the same time they are claiming to be determining pricing based on average rental prices.
Last edited:
Upvote
3
(3
/
0)
If this current action does not do this, I foresee a class action that forces RP to disclose its entire client list, all recommendations made to the landlords with the accompanying prior rates, and the actions taken by the landlord based on the recommendations, which kicks the door off the hinges to all manner of accompanying actions on behalf of the tenants.
Upvote
4
(4
/
0)
This is the expected outcome if they win the case.
It would likely end up as a class action, but it would be a big one. It may pale in comparison to the extra paid in rent over time, but it may very well be thousands per person rather than some cents or dollars.
There is also the chance that Harris wins, decides something must be done politically about the housing market but does not want to crush property values, and decides that disgorging profits from this legal event really helps that goal. That would be better for you.
Maybe that would be better for everyone. In fact, I think I will donate more to Harris.
Upvote
8
(8
/
0)
imo it’s time America implements socialized housing like China, where certain areas have regulated price ceiling below market prices.
Upvote
-11
(2
/
-13)
At a minimum it means they'll have to stop coordinating their rents which would help tenants a lot.
Upvote
5
(5
/
0)
Capitalism depends on substantial, proper, and effective competition to function 'as advertised.' Capitalism is also inherently driven to reduce and ultimately eliminate all competition. However, when this relationship is illustrated as a Venn diagram, there's no overlap between those forces where capitalism can exist in a stable form. Hence why capitalism is constantly devolving into a parasitic, rent-seeking, society-wrecking, ransom circus. It's because capitalism preys on society. People are its food, its fuel. And there is not and never will be a positive outcome for that kind of relationship.
RealPage is simply this reality laid bare for everyone to see. It's just capitalism being capitalism, and capitalists being capitalists. They are what they have always been and will always be. Capitalism has no place in a civilized society, and it never will.
RealPage is simply this reality laid bare for everyone to see. It's just capitalism being capitalism, and capitalists being capitalists. They are what they have always been and will always be. Capitalism has no place in a civilized society, and it never will.
Upvote
2
(8
/
-6)
If RealPage operated a separate implicit price-fixing scheme for each sub-market, none of the legal implications would change. Localized market power is still market power. A landlord agent who controls 80% of the multifamily housing in Seattle or Houston would also face scrutiny.
Upvote
8
(8
/
0)
OP was describing an area where home prices were in the $300K range. This is also an area where median car payments are $1000/mo. I think 'no way in hell' doesn't really apply here.
Where I live and houses are in the $1.6M range, I agree with what you say.
Upvote
3
(3
/
0)
I live in a large apartment complex that uses RealPage. While I like my apartment and the complex, I've been curious about what specifically RealPage was doing that was illegal.
At first, I thought that since my complex (and all their direct competitors) post all of the rents for their currently available apartments on the internet, maybe RealPage was just aggregating this data in real-time. It would make sense that an apartment complex wouldn't want to hire someone full-time to check hundreds of different apartment listings every day to keep up with the latest changes, and if that were all RealPage were doing, that wouldn't be illegal.
But then it occurred to me that one thing that isn't public is the increase in rents for lease renewals. If one apartment complex knows that they can raise rents by 10% and still get most people to renew, but if they raise rents by 15%, most people will leave, that's useful non-public information. If RealPage is collecting that data, they could tell all their customers that the optimal income-maximizing increase is 12% instead of 10%.
A point of contention seems to be whether RealPage is requiring its customers to accept their rent "recommendations". If they do, that seems to clearly cross the line in terms of anti-competitive behavior. Effectively, that means creating a cartel. I suppose it's up to a judge to determine whether "Auto Accept" also crosses that line.
Upvote
4
(4
/
0)
Upvote
-1
(0
/
-1)
Well, no. It's a collusion-as-a-service product. Collusion is also illegal in the US, even tacit collusion which occurs when you have a small number of market participants and where the participants just need to mutually understand what market conditions are most profitable - for instance US health care companies in a concentrated market refusing to try and undercut competitor prices because they recognize consumers have no options. That's basically what's happening here. The landlords don't need to conspire to set prices, they just have to agree to provide the software with the necessary information and recognize that the algorithm will produce the most profitable results for the entire market.
Upvote
10
(10
/
0)
The Geeman
Wise, Aged Ars Veteran
Are you advocating for socialism here? Sounds suspiciously like it!
'cos being a socialist myself I can tend to recognise the signs. Well social anarchist really but close enough.
Back to this subject it's obvious this is cartel behaviour but with the current vagaries of your justice system, i.e. the loading of right wing judges, precludes second guessing the outcome. I have some landlord friends and discussed this with them and they just look at local rents advertised. Most don't use top dollar to keep the good renters but some are charging as much as possible to pay the mortgage and make some readies. Money made from money is still immoral in my socialist eyes. Ok if providing a decent service but gouging overrides the benefits of the service aspect I think.
Upvote
5
(5
/
0)
This makes sense, at least with fixed mortage and predictable maintenance costs. What I can't figure out regarding the whole realpage issue is, if realpage allows new owners to extract excessive profits, then there must be a large pricing gap between rental pricing giving a fair return on investment that is sufficient motive to purchase and rent out properties, and the rental pricing returning those excessive profits. So why can't those people who are not intent on gaining those excessive profits, as surely there are some such people with money to invest, buy homes and apartments and rent them out at reasonable price, which would still be enough to motivate them to put their money in this rather than in potential other investments?
The ability for rental pricing to stay excessive long-term seems to depend at least in part on something also keeping the purchase price of properties excessive.
Upvote
-6
(0
/
-6)
There are still many people renting out properties on reasonable terms, but it is also not the majority of the the market these days. At least here, one big company has been buying everything up, renovating, and in looking are setting rents very high. Most notable is that smaller units are not much less expensive than larger ones, so the low priced options have been removed. They want more than double what these places were going for before the pandemic, so it is much more than inflation.
The large amount of money they make, and the ease with they can get loans to buy up more property or construct a new building, allowed them to control a substantial portion of the rental market. They go around to small landlords and make large offers as well from what I hear from the small landlords I know. The benefit to them is not only that they can rent the property, but that they remove a much lower priced competitor while doing so.
The ability to sustain rents at that level is limited not only by property values though, it is limited by ability to pay. Unlike property valuation, which can fall off a cliff if people stop believing in it, rental income is real money which must be obtained monthly.
That means wages must keep pace to allow this to happen, and that means inflation. The alternative is that the money is not there, and that instead ends up bursting property values, as vacancies rise and loans cannot be paid. At some point, people will get roommates because they cannot pay, and the rental market shrinks.
Half of all rental households being cost burdened by rent is politically and economically dangerous regardless though, this is a problem they are aware requires a solution.
Solutions are mostly inconvenient, but the best of the bad is likely a government backed building campaign, and maybe more significant regulation for companies owning multiple rental units. Where to get that money is a good question, but this nice big potentially criminal conspiracy may offer some options to at least provide some of the funding. It even has the interesting aspect that if judgements or settlements cannot be paid and they end up with property instead, it is the kind of property which is useful in this, even if it is just sold off again with some restrictions.
Upvote
9
(9
/
0)
Statistical
Ars Legatus Legionis
Basically every illegal activity has been (or will be) retried "with a computer" so I guess this isn't surprising just sad.
Upvote
11
(11
/
0)
Statistical
Ars Legatus Legionis
If you buy a house today with interested rates and house prices as they exist today you likely would be forced to charge a very high rent. The reality though is you are "competing" with people who bought the house for half the current price and locked in interest rates <3%. They can rent for significantly less but with services like RealPage they don't have to they can extort with zero risk.
Upvote
7
(7
/
0)
I feel like after landlords started telling me the rent prices are set by "the computer" that the prices also started consistently going up every lease term, by higher amounts.
Cut to 2024 and my most recent lease. For the first time in seven years, my rent is staying the same.
Maybe it's just the market, and totally a coincidence that the year my rent is the same is also the year RealPage is getting sued. But that's the genius of the product and it's proprietary algorithm. They can use that to obscure what's really happening. I don't trust that RealPage has my best interests at heart at all.
And now my complex has introduced Bilt, which is going to reward me for paying my rent. Or something. Just let me pay my damn rent from my damn bank account. Just what we need is some other rent-seeking middle man trying to insert itself into the "value stream" like a parasite, to try and sell me stuff.
Cut to 2024 and my most recent lease. For the first time in seven years, my rent is staying the same.
Maybe it's just the market, and totally a coincidence that the year my rent is the same is also the year RealPage is getting sued. But that's the genius of the product and it's proprietary algorithm. They can use that to obscure what's really happening. I don't trust that RealPage has my best interests at heart at all.
And now my complex has introduced Bilt, which is going to reward me for paying my rent. Or something. Just let me pay my damn rent from my damn bank account. Just what we need is some other rent-seeking middle man trying to insert itself into the "value stream" like a parasite, to try and sell me stuff.
Upvote
7
(7
/
0)
Because the amount of land is fixed, and the people willing to overprice have more money to buy what's available than the ones who charge a reasonable rent.
Then there's the fact that when a tenant finds a landlord like that, they tend to not leave, so those landlords are less liquid than the crappier ones.
Upvote
7
(7
/
0)
That's all the same thing. And that's all collusion. Collusion through a third party is still collusion.
Upvote
7
(7
/
0)
There are a few individual landlords who surely do this. One here, one there, etc. 25 rentals in Silicon Valley not charging maximum won't affect a thing. Anyone who rents out "en masse" has to get the best returns. If they don't, they'll be replaced with someone who is.
Sure, billionaires could do it out of the kindness of their hearts - but you'll find that billionaires usually become that way because they don't HAVE any kindness in their hearts that extends to non-family members of society.
If some investment firm decided to try this, they would underperform those using RealPage, and quickly lose investors or be bought out / merged / liquidated.
Upvote
5
(6
/
-1)
Oddly, that is part of RealPage's sales pitch to corporations investing in rental properties.
Upvote
7
(7
/
0)
could it be that there is a barrier where people is too broke to buy and too "rich" to rent?
Worst is that buying in many places requires a mortage, and the lender often thinks you are too poor to get a 1k mortage but will give you more than that for a rent... see? it is not the landlords only the problem, it is the whole market.
Upvote
9
(9
/
0)
I understand it's not possible in some areas, but if you can swing a mortgage, do it. Your rent never goes up again. And inflation takes the edge off the pain. 5years at 3% inflation makes that mortgage feel like 86% of the original rate. That's a lot better than rent going up 16% due to inflation over the same time frame, and likely more due to supply constraint and market manipulation.
Upvote
-2
(1
/
-3)
this would be a good step in a good direction. However before doing it, I think what is needed are new zoning laws, and that is much more difficult because it wouldn't rely on the federal government, nor at the state level, it would come down to cities / counties who would be significantly weaker (in comparision) when the NIMBYs sue (and they will)
Upvote
0
(0
/
0)
That's not necessarily always an option. A 20 or 30yr fixed rate mortgage is basically unheard of in Australia, for example.
Upvote
2
(3
/
-1)
Also, you want a fixed rate when interest rates are at their lowest, not when they are about to come down.
Upvote
1
(2
/
-1)
Well, that's literally how a cartel operates.
Consider my opinion changed from, "Maybe they broke the law," to "They definitely broke the law."
Upvote
6
(6
/
0)
Frankly, I hope both the company and a few engineers get prosecuted. RealPage is illegal, if it's torn down as it deserves but no engineers are prosecuted, it'll be easy for it's replacement to hire back the same people.
Upvote
6
(6
/
0)
This is an excellent point.
But I'd note, this problem doesn't require foreign companies. Just large rental firms with no connection to the communities they own property in. So the process is already underway across the U.S., and like Greece, it's building to a crash. The timeline is up for debate, but I suspect it's 10 to 20 years tops. We'll know the gig is nearly up when smaller rental firms start getting swallowed at a rapid clip.
Upvote
6
(6
/
0)
They definitely should face scrutiny. I have my doubts that they would face scrutiny.
Upvote
0
(0
/
0)
The reason why most class action lawsuits give very small amounts is because they're dealing with very small harms. For example, the Zoom class action harm is pretty small.
However, the damages here are massive given how long Real Page has been active in the markets. Depending on how far back the collusion goes. You could easily have people who have more than $100k+ of damages over 15 years especially if they lived in a larger city where the rent problems have been much larger. Even if the lawyers get 50% of that money, that is still a huge payout.
In the long run, current housing values have to be gutted. We'll just have to make those who bought in at the top of the market whole.
Upvote
3
(3
/
0)
Or even just local people who buy up a ton of the market are also just siphoning money out of the economy. That is what happens when rich people get money. It stops circulating. Doesn't matter a whole lot if they're rich locally or in some other country.
Upvote
9
(9
/
0)
RealPage's profits from that harm are probably not sufficient to cover the harm to the class, since they basically just made it easier for the landlords to jack up prices, and the landlords will be the ones pocketing the largest cut of the excess. However if RealPage loses here it'll probably set precedent for a bunch of smaller class action suits against each landlord to get it back from them,
Actually can you do a class action suit against a class or is the class only the plaintiffs?
Could we see a case of A Whole Bunch Of Renters v All The Scummy Landlords?
Upvote
7
(7
/
0)
uesc_marathon
Ars Scholae Palatinae
Cash fine isn't enough, Realpage leadership needs to be packed into a tiny jail cell together.
Upvote
1
(1
/
0)
Upvote
4
(4
/
0)