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Price fixing by algorithm is still price fixing

thelastgallon
149 replies
19h36m

YieldStar software helps landlords set prices for apartments across the U.S: https://www.propublica.org/article/yieldstar-rent-increase-r...

"To arrive at a recommended rent, the software deploys an algorithm — a set of mathematical rules — to analyze a trove of data RealPage gathers from clients, including private information on what nearby competitors charge.

For tenants, the system upends the practice of negotiating with apartment building staff. RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.

One of the algorithm’s developers told ProPublica that leasing agents had “too much empathy” compared to computer generated pricing."

SoftTalker
130 replies
18h21m

Say I own a house, and want to rent it out. I'm naturally going to go onto rental search sites and look at what similar houses in the area are renting for, and probably ask something pretty close to that.

I would assume this is not illegal because it's using public information and not colluding with any competitors on price.

But subscribing to a service that uses an algorithm that does basically the same thing is (might be) illegal? Does it cross the line when I explicitly agree with competitors that we'll all use the same algorithm? Or if we're all just independently using the popular pricing service could that become illegal? Or if the service agreement requires me to not rent for less than their algorithm calculates?

10000truths
58 replies
18h7m

What makes it collusion is the fact that others are using it as well, so the answer to your questions is yes. My understanding is that there's nothing wrong with building your own software that crawls public information and computes a price for you - the key thing is that it has to be your own, you can't distribute that software to others.

jkic47
28 replies
17h56m

ate you sure it is that? after all, we all independently use the Kelley Blue book value of a car before we sell.

I think there has to be some intentional and provable link that you and I agreed (colluded) to use a particular value and set a floor below which we wouldn't sell.

dkjaudyeqooe
25 replies
17h45m

ate you sure it is that? after all, we all independently use the Kelley Blue book value of a car before we sell.

That book doesn't price individual cars, only types and the price of the actual car is open to interpretation and usually negotiation.

slrainka
24 replies
17h22m

The key distinction lies in how YieldStar approaches setting rental prices compared to other systems. YieldStar not only recommends rental prices by analyzing the entire inventory it oversees but also incorporates a strategy that effectively eliminates the possibility of rent negotiation with potential tenants. This approach mirrors the dynamics of the prisoner’s dilemma, a situation in game theory where individuals may not cooperate, even if it’s in their best interest to do so. However, YieldStar transcends the Nash equilibrium—the point at which no participant can benefit by changing strategies if the others remain unchanged—by stripping tenants of any bargaining power. This ensures that the rent pricing strategy is firmly controlled, without the usual back-and-forth negotiation process.

samatman
21 replies
17h4m

This is a strange claim. How is it that software can eliminate the possibility of rent negotiation? A tenant can negotiate, or try to. How does software eliminate the possibility that this will succeed?

cogman10
12 replies
15h32m

It's the scope and breadth of deployment and the algorithm/business pressures.

RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.

This is the key to why it's price fixing. Everyone playing ball and means that the raising rent rates increases everyone's take home even if a few operate with lower occupancy.

The software calculates rent rates that make sure occupancy isn't too low to keep everyone in line. It removes bargaining with the promise that "if you play ball, you'll be rich".

Tenants can negotiate prices just like you can theoretically haggle with amazon.

Aunche
10 replies
13h17m

RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.

Of course they would discourage them from deviating from Realpage's recommendation. Why are you paying for a software that recommends the most profitable rent if you aren't going to follow it? Realpage doesn't want property managers to complain that the software isn't working when they're ignoring the software's recommendations.

I have yet to see any evidence that there are any actual consequences of ignoring the recommendations. I'm assuming that Realpage will always accept payment for their services. This suggests that price fixing is unlikely. In the case of a cartel, members are incentivized to sell more than their quota allows, and you need active enforcement to maintain compliance. See the history of OPEC.

tsimionescu
7 replies
10h55m

It doesn't matter if there are consequences for not following the illegal price fixing scheme (the recommendation algorithm). The fact that they are creating a price fixing scheme in the first place is illegal.

It's the same thing as if I were to call for a meeting of all landlords in my area to discuss rents. Anyone who owns property in the area is invited. At the meeting, I would propose that we all keep rents above 1000$ per room. People would argue and finally there'd be some broad agreement that 900-1100$ dollars per room is a better idea. We don't sign anything and don't imply any repercussions for those who ignore it. Then, 90% of those present would undercut the agreed numbers and offer their rooms for 800$. The end result is that rooms in the area go for 750-900$, so we utterly failed.

What everyone present at that meeting did, even those who undercut the agreed prices, is illegal price fixing. Competitors are simply not allowed to discuss and agree on prices in any way.

If we replace the meeting with a third party offering a recommendation algorithm that everyone independently follows, knowing that others do the same, nothing materially changes. The algorithm need not be binding, and need not be adopted fully, for this to be illegal to do.

Geisterde
6 replies
6h12m

I find the pernicious belief that prices could be fixed in the market itself more dangerous than the dumbest price fixing scheme of all time. Let it play out, so we can all remember that price fixing doesnt work, and we might actually see some good come from this story.

tsimionescu
5 replies
5h56m

Price fixing absolutely works for the parties fixing the price, assuming they have a dominant enough position, at least for some significant time. Look at OPEC - do you seriously believe they would be richer if they competed instead of agreeing on prices/supply?

Monopolies can extract massive wealth from a market, they perfectly optimize profit as long as they are not exceedingly incompetent. Price fixing is just a less organized monopoly.

The problem is that they do this at the cost of all other market participants. But markets can't correct for powerful enough monopolies or cartels. Only outside intervention (riots, government intervention, disruption of the whole sector) can dissolve a monopoly. There is no example in history of a monopoly losing its position in a market without this, since they can always just buy out incumbent competitors.

Geisterde
4 replies
5h29m

Why would you compare landlords to OPEC? One organization has the backing of several militaries, including ours, defending their market position by threat of war. If you try to sidestep them you could end up like iraq.

Price fixing in the market doesnt work, because rival landlords cant call the government to airstrike their competitors when they get undercut.

tsimionescu
2 replies
4h42m

As long as demand exists for the product, cartel members make more money than regular market actors. Defectors can make even more money, but that behavior is going to either be irrelevant (if the defector is too small to Mather), or it will be punished - not by armies, but by other coercive measures. Bribing to return, denying access to other services, bad mouthing, even vandalism or illegal violence. The advantage of the cartel is too large to be allowed to dissolve.

And again, we don't have to guess. Cartels need to be broken up from the outside, they just don't dissolve naturally. This is basic economics, and a well understood weakness of markets. The idea that monopolies and cartels are too weak to resist in a market is not born out by either economic theory nor history.

Aunche
1 replies
3h42m

As long as demand exists for the product, cartel members make more money than regular market actors. Defectors can make even more money

These two are completely contradictory statements. "Regular market actors" are the same as "defectors." Fracking companies, for example would not be able to exist without OPEC driving up the price of oil because it would be too expensive.

tsimionescu
0 replies
3h20m

Buyers are also market actors. Also, suppliers who haven't been part of the cartel don't have access to their pricing strategy, and so can't profit as much. Defectors know exactly for some time, and can use that information to beat the market and the cartel in the short term.

chii
0 replies
4h30m

If you try to sidestep them you could end up like iraq.

iraq invasion has nothing to do with opec. And no opec country has made military moves to enforce the cartel.

And in fact, a lot of opec countries tries to skirt the quotas for personal gain!

FireBeyond
1 replies
11h59m

Consequences involve being kicked off the service with no refund for the (significant) fees.

Aunche
0 replies
11h44m

Where does it say that? If it's something on the contract, you'd think that the FTC would open with that rather than vaguely imply this this happening.

tsimionescu
0 replies
11h3m

The haggling part is not that relevant to whether this is price fixing or not.

If RealPage had the effect that all advertised rents in some area were 1000$ but 90% of renters actually negotiated that down to 800$, it would still be price fixing.

Conversely, if landlords in some area all independently decide not to budge from advertised prices and as a result occupancy rates are 10%, that would not be illegal price fixing. Most markets for consumers don't allow any kind of price negotiation, and yet they are not guilty of price fixing.

The key problem is that RealPage facilitates and even encourages explicit collusion between competitors, by showing the same non-public price recommendations to competing lamdlords. Whether that's successful or not and whether they try to make it contractually binding or not is ultimately irrelevant. As the FTC says, unsuccessfully trying to do price fixing is still illegal price fixing.

treis
3 replies
14h14m

This sounds like denying the existence of price fixing altogether. Sure, buyers can try to negotiate against a price fixing scheme but it won't work. The price is fixed.

The software isn't really doing anything. It's simply the means of communication by which the prices are fixed amongst the suppliers.

FireBeyond
2 replies
11h57m

The software isn't really doing anything. It's simply the means of communication by which the prices are fixed amongst the suppliers.

The software literally includes the algorithm that says "this week, you will set the rate for this apartment at $X" based on its data. And if you want to deviate from that, without being kicked off, and losing your substantial fee payment, you will do that rate (and 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).

tsimionescu
0 replies
10h53m

Even if they didn't kick you off, they would still be engaging in price fixing. They would be worse at actually changing prices with their scheme, but badly executed, ineffective price fixing is still illegal.

lupire
0 replies
4h31m

Can you link to info on that feature of the software?

dkjaudyeqooe
2 replies
17h0m

Because the software has set the price and the landlords are using the software's price exclusively. That is why it's price fixing.

chii
1 replies
4h28m

to me, it's not enough to show that the same algorithm or software is deciding the price.

It has to be that there's some threat of punishment from the cartel against those who would lower their price from the agreed one. For example, the explicit agreement by the landlord to keep the price at the algorithmicaly calculated one, even so far as to leave vacancy (where as there wouldn't have been a vacancy if the price was lowered).

radicality
0 replies
1h7m

There is. I forget the number, but the landlords are only allowed to disagree with the software (and give lower rent) only ~10% or so of the time. Otherwise they will be kicked off of the price fixing platform.

koliber
0 replies
8h9m

It might not remove the possibility of negotiation. If it reduces the likelihood of negotiation, the impact is similar.

dkjaudyeqooe
1 replies
17h18m

The only way you can productively refuse negotiation is by knowing the price is fixed (or you have the only supply), otherwise others will take your business.

jprete
0 replies
17h5m

If it's widely believed that other landlords use the same pricing system as you, then that's exactly how landlords can refuse to negotiate.

vineyardmike
1 replies
14h52m

What’s missing here is that landlords agree to use the algorithm or leave the unit empty. It’s part of the TOS. So when many marker participants do this, it’s colluding.

AnthonyMouse
0 replies
8h54m

Wow, that's brazen if true. I don't know why anybody is even talking about algorithms. That's a contract to fix prices.

It also implies that all of the landlords using it are idiots. Not only is price fixing illegal, joining the cartel is optional and costs you money for no personal advantage because you'd have to leave your units vacant instead of immediately renting them out at the higher price induced by the "selfless" idiots in the cartel.

nerdponx
14 replies
17h31m

It's an interesting area because the line might be fuzzy. It's not reasonable to expect every landlord to become a data analyst or statistician!

So naturally there's a market for a product that helps landlords make data-driven pricing decisions. I'm sure the big landlords know exactly what they're doing, but I suspect that the smaller landlords don't even realize they are participating in a price-fixing cartel.

As an interesting point of comparison, consider that the Zillow "zestimate" is also an algorithmic price recommendation, shared by all market participants. What's the difference there? Is it that buyers and sellers can both use the same algorithm freely?

I want to make very clear that I think price-fixing is bad and that I believe extremely high real estate prices are at the root of a large and growing amount of misery in Western economies and societies. But I'm also cautious of pursuing thoughtless regulation that hurts small businesses, to the advantage of the big businesses that are causing all the problems in the first place.

vineyardmike
4 replies
14h42m

It's not reasonable to expect every landlord to become a data analyst or statistician!

And it’s not reasonable for every business to succeed. Good businesses get good at being a business and learn skills necessary to succeed. I had a corporate landlord where the leasing agents would go on tours of neighboring buildings in their spare time to build comps. You don’t need a price fixing algorithm or a pay-rolled data analyst.

I think Americans have a soft spot for landlords because it’s a common business for the middle class to use to move up in the world. Which is nice, but most Americans also have stories of parasitic landlords that left them in terribly unmaintained homes with big rent increases. Regulation will absolutely hurt middle-class landlords but will increase the average sophistication of the industry.

nerdponx
3 replies
12h6m

Serious question:

Would it be illegal to hire a human "price consultant" who was very popular among your landlord friends? Does it matter if the price consultant only serves 5% of the landlords in an area? What if they serve 20%? 50%? Where does the line get drawn between "seeking advice from an expert" and "engaging in price-fixing"?

I wouldn't be surprised if that was tried at some point in the past, so there might already be legal precedent for the non-algorithmic variant of this.

Regulation will absolutely hurt middle-class landlords but will increase the average sophistication of the industry.

Sophistication is a tool used deliberately and maliciously by large incumbents to suppress competition and to crush smaller firms. And I'm not convinced that middle-class landlords who own a handful of units are the big bad guy we should be going after here. I can only hope that the FTC agrees and is willing to focus their attention to where it will actually help people.

tsimionescu
2 replies
10h42m

Would it be illegal to hire a human "price consultant" who was very popular among your landlord friends? Does it matter if the price consultant only serves 5% of the landlords in an area? What if they serve 20%? 50%? Where does the line get drawn between "seeking advice from an expert" and "engaging in price-fixing"?

The answer is most likely that it would be illegal, yes, at least if your friends are offering properties in the same area. Even discussing pricing decisions with your friends is likely illegal.

Imagine it like this: Coca Cola and Pepsi executives are not going to meet for brunch and casually start discussing what margins they think are reasonable and how they set pricing in different markets and how low they are willing to go with their price. These are some of the most closely guarded secrets of a company. Decision makers who are aware of these aren't even easily allowed to leave one company and join the other, because of the risks of leaking this information. And if they do discuss this things, they would easily be seen as guilty of collusion to fix prices.

The fact that two landlords who happen to be friends are not the CEOs of multi-billion dollar companies doesn't fundamentally change the law. You are not allowed to discuss pricing decisions with your competitors. If you want to collobrate, you need to incorporate and pool your resources into a common enterprise.

And you can hire a price consultant, but that price consultant can't be working for other landlords in the same area. You could hire different consultants from the same firm, but the firm would have to be very careful to ensure that the consultants don't discuss their clients with each other in any way.

AnthonyMouse
1 replies
8h40m

These are some of the most closely guarded secrets of a company.

This seems like a weird argument.

For some companies their pricing is super secret because it's often negotiated and they don't want Customer A to know that Customer B is getting a bigger discount, and if a competitor knew Customer A was overpaying they'd send them an offer.

But for others the price is just the price. Nobody is going to Walmart to haggle. All of Walmart's competitors know exactly what Walmart's customers are paying because it's written right there on the sign. So how could it be illegal to tell them?

tsimionescu
0 replies
8h28m

That's not what I mean by pricing decisions. You of course know how much Walmart asks for tomatoes. What you don't know, and is a closely guarded secret, is how Walmart arrived at that price. Is the current price close to their minimum possible, and would they remove tomatoes from the shelves rather than drop this price if the demand wasn't high enough? Are they expecting to increase it or decrease it in the next six months?

And this information is important, because if Whole Foods knew it, they could either (a) try to undercut Walmart to steal their customers, but also could (b) safely increase their price knowing that Walmart plans to do the same, and so not fear losing tomato customers to Walmart.

In contrast, landlords working with RealPage know that at least a large percentage of other landlords follow the exact same pricing strategy, and thus be secure that, if they also refuse to lower prices as the algorithm is recommending, they won't lose tenants to other landlords. Of course, some of them might chose option (a), undercutting all the others, but that's not a real problem in a cartel with so many small members (one cheating member won't significantly affect prices).

So, it's not illegal to say "you know, Walmart charges 2$ for a tomato". But it is illegal to say "you know, I'm in talks with Walmart to convince them to charge 2.5$ per tomato starting tomorrow".

kllrnohj
3 replies
17h7m

It's not reasonable to expect every landlord to become a data analyst or statistician!

Why not? It's what they did just fine for thousands of years. What fundamentally changed in the last 20 years that makes it impossible for landlords to determine their own price?

damontal
1 replies
16h56m

Sounds like they’re determining their own price with the technology that’s available.

kllrnohj
0 replies
16h31m

They aren't, they're outsourcing pricing to a 3rd party knowing that the same 3rd party is doing everyone else's pricing decisions as well.

Geisterde
0 replies
6h2m

Specialization, how much time out of my day do I have to worry about the price, if I am dealing with the city trying to get the water fixed, or repaving the driveway, or handling customer complaints? It can be more efficient to pay a modest sum to arrive at the right result, or, more profitable to actively watch the market and adjust pricing, but that costs time/money, so itd better be worth it.

colechristensen
3 replies
16h23m

It’s not fuzzy. When a group of people get together to determine a common price for goods, that’s collusion… price fixing. They are literally selling price fixing as a service openly in public.

Yes indeed setting prices is difficult. If you use a service to do it for you, it should be quite illegal, and arguably already is.

Also the “big” businesses clearly outsource this too, having lived in many large apartment complexes where it was obvious a third party algorithm was doing it.

bluGill
2 replies
11h20m

The service itself is legal, but you have the difficult task of not using one client's data when working with a different client.

tsimionescu
1 replies
10h35m

I don't think it's legal at all. If you're making official pricing recommendations, you're essentially trying to convince competing businesses to agree on price fixing, by definition. It doesn't really matter how you arrive at that recommended price.

The only way this could work is if you give individualized pricing recommendations based solely on public information + the information of the specific landlord, and if your marketing and contractual agreements and so on make it very clear that different landlords will see completely unrelated prices.

Otherwise, even agreeing on the same pricing formula is an illegal form of price fixing (say, if everyone agrees to sell at public average price + 10%, dropping down to public average price + 5% if unoccupied for one month), per the FTC briefs.

projektfu
0 replies
5h23m

Exactly. If it were just a model, you wouldn't need to ask the cartel to authorize a different price. A model supplier doesn't really care if you use it or not, just that you buy it. But landlords (generally larger owners or operators of large multi-family projects) are paying high fees to the software provider previously because they think it gives them plausible deniability about the cartel behavior.

trimethylpurine
0 replies
16h34m

Analyst or not, the issue is knowing who is willing to underprice you. You can't know that unless you have insider information, in this case provided by a shared database. Scraping public listings doesn't give you that.

casualscience
12 replies
13h10m

My understanding is that further than just using software, the software is optimizing to increase maximum profits for the industry by causing a cartel block of people who won't lower prices.

Any individual can go out there and build a model for the rent price, the issue comes in when that model is able to coordinate everyone to keep the prices high and discourage competition/undercutting.

Geisterde
8 replies
6h18m

Except, setting higher prices doesnt discouage competition, it encourages it. It makes it far more profitable to undercut anyone foolish enough to buy into this strategy.

nottorp
6 replies
5h53m

Yep, especially with housing. You just build more homes quickly, right across the street from the overpriced ones, and rent them for cheaper.

projektfu
4 replies
5h33m

Missing sarcasm tag on building homes quickly.

nottorp
3 replies
5h22m

Also on right across from the overpriced ones.

Should have been obvious...

Geisterde
1 replies
5h16m

There is property for sale in probably every corner of the world, you dont need to build anything.

blactuary
0 replies
1h19m

This is laughable. Every major metro area in the US is in the midst of a crisis of lack of housing supply.

tomn
0 replies
3h3m

Oops. I've seen worse free-market capitalist opinions held earnestly on HN, so it's hard to tell...

tomn
0 replies
5h44m

"just" is doing a lot of work there. If the cartel model is profitable, then those taking part have the incentive and resources to buy up property in the areas that they operate in themselves.

At least where I live, there are landlords who operate reasonably (reasonable rents, with safe and maintained properties, that respond quickly to issues), but there's so much demand relative to supply that it doesn't really affect the ones who are just trying to extract maximum profit.

zenapollo
0 replies
33m

Please ignore this fool, they are clearly a dogmatic libertarian type, not someone who thinks in complexity. He even cited Econ 101 as a source lol.

As long as there are financial speculators, price bubbles will happen. A massive recession can clear out speculators and burst price bubbles, whom will have in the meantime, fleeced the public for billions, as will as made many be homeless.

In commodities markets, the CFTC has different rules about what speculators can do vs real market participants (real producers and consumers). There are very few rules/laws that disincentivize real estate speculation and many forces that incentivize it. These algorithms are additional tools that help speculators maximize profit.

Housing has very limited supply and very inelastic demand. Prices will not come down unless there is another 2008 style recession. Speculators will continue to pile in and fleece renters maximally.

You might say well that’s just business, but the algorithmic price collusion is really not my biggest issue. I think there’s a different moral question we should ask. What is the number of single family properties a single company should own in a given market. Should they be allowed to own 100%? My silly libertarian friend would say why not? The market will correct. A stronger thinker would probably see that a legal limit probably makes sense.

koliber
2 replies
8h12m

You seem to hit the crux. There is a blurry line here and I had a hard time seeing where it really divides legal and illegal until your comment.

Showing that the average rent is this, the min and max are that, and the percentiles look like this is probably legal. Showing historical trends is also legal. Recommending a certain rent based on a single shared algorithm used by all the players begins to cross that line.

avarun
1 replies
7h40m

Especially when it uses material non-public information in order to do so.

trogdor
0 replies
2h14m

Using material non-public information to set prices is not illegal.

Colluding with other sellers to fix prices is illegal. That is the issue here.

jkoudys
0 replies
5h7m

Which makes this a great example of the shittiest side of "AI": not as software techniques to detect patterns and relationships, but as a method for obfuscating your sources. This software really is just saying "don't price fix by talking to eachother, price fix by having it done on our platform for you."

letmeinhere
25 replies
16h52m

The algorithm is not operating on public info, it is soliciting proprietary pricing and vacancy data that is not available to renters or regulators. That secretive information sharing is the basis of the whole scheme.

And the collusion doesn't stop with this information hoarding; the pricing recommendations are as profitable as they are precisely because many property owners in a market are enacting them with the knowledge that a known quantity of their peers have no intent to undercut. Sure, someone can renege on that, but collusion doesn't require that you have an airtight legal contract to bind all parties; after all, such contracts are inherently illegal!

jessriedel
23 replies
16h47m

That secretive information sharing is the basis of the whole scheme.

can you recommend a link that this describes this in detail?

refurb
12 replies
15h5m

Where?

All I see is this: "A company representative said in an email that RealPage “uses aggregated market data from a variety of sources in a legally compliant manner.”"

The only non-public data are it's own customers. But if I'm a massive landlord with multiple units, I have the same advantage?

olliej
10 replies
13h21m

The whole idea of anti-monopoly laws is to prevent price fixing by market, and there are numerous (illegal) ways to do that: being a monopoly and using that position to set prices that are not representative of market value (both buying and selling. Iirc antitrust in the us started as a result of standard oil setting the price oil would be bought from suppliers).

Another illegal option is collusion. That is a group of competitors get together and set a price that they will all use, again independent of actual Market value, just because the colluders have sufficient control of a market that when they set a price people have no choice but to pay it. This is super effective when the market it not fundamentally “free” like housing, gas, power, healthcare, etc.

What these companies are doing is providing a tool to launder the collusion between competitors in a market, by having every “competitor” in the market get an “algorithmic” price that is fundamentally tied to the “algorithmic” price they provide every other “competitor”.

If these landlords got together in a room and decided the prices as is happening here, it would be more or less immediately subjected to scrutiny. By doing the same thing via a third party and calling it an “algorithm” it is somehow not subject to the same restrictions.

Geisterde
9 replies
7h4m

By the time the lawsuit against standard oil had concluded, they had lost market share, because price fixing doesnt work in real life, as more than a few industrialists have had to learn the hard way. Rents and mortgages are too high, but you are looking in the wrong place thinking housing costs are high due to price fixing.

fireflash38
7 replies
6h21m

Do you have some papers to back up the claims that price fixing doesn't work?

Geisterde
6 replies
5h27m

Sure, I would recommend you start with "basic economics", 5th edition, by thomas sowell.

ethbr1
2 replies
4h19m

Are you speaking in the long term?

Because it certainly works over decades-term.

Standard still had 70% market share when it was charged, and 64% by the time it was broken up.

Over the ~40 years it existed, it was incredibly profitable.

Geisterde
1 replies
2h51m

I submit that the long term issues we are having in the united states, are in fact the result of short term solutions. Also, standard oil controlled more like 90% of the market, so in that context they had lost more like 25% by the time the trial concluded.

ethbr1
0 replies
1h17m

64% is still an incredible pricing and profitability position. Most firms would kill to be in such a situation!

Apple has, what, 20% smartphone market share?

And look at the margins they're able to run. Granted, boosted by platform lock-in.

batch12
1 replies
4h16m

I am not finding the phrase price fixing anywhere in that book. Am I holding it wrong?

Geisterde
0 replies
2h49m

Its a book on basic economic reasoning, price signals, competition, those things are covered from a principled basis, sorry if it doesnt ctrl+f to tell you how irrational the idea of price fixing is.

blactuary
0 replies
1h22m

I would recommend going beyond Econ 101, as well as observing the real world and reams of empirical evidence. Housing is not a perfectly competitive market for widgets with an abundance of sellers where everyone has perfect information and there are no transaction costs. "(illegal behavior X) could never happen because markets" is freshman dorm at UChicago thinking

BoiledCabbage
0 replies
3h33m

price fixing doesnt work in real life

Yeah you're gonna need some pretty strong support to make a claim like that - and not just an anecdote from the internet. Do you have any new proof upending long solidified economics?

trifurcate
0 replies
14h34m

But if I'm a massive landlord with multiple units, I have the same advantage?

The entire point is that monopolization confers the same advantage that this scheme does.

jessriedel
1 replies
3h39m

Are you talking about this?:

One advantage RealPage’s data warehouse had was its access to actual lease transactions — giving it the true rents paid, instead of simply those a landlord advertised, RealPage said.

The above quote is the most substantive description of info sharing I could find in the section "Who Uses the Software and How It Work" in the article you linked. Is the claim that the secretive info being shared is the actual rents tenants are paying? Are companies and people not normally allowed to share that?

stackskipton
0 replies
2h28m

Is the claim that the secretive info being shared is the actual rents tenants are paying? Are companies and people not normally allowed to share that?

Companies and people generally do not share this information publicly and most companies consider it extremely proprietary.

So yes, that what's these lawsuits are about. All these companies share this extremely sensitive data (Vacancy data, actual rent and length of rental contract) with RealPage, Realpage algorithms use it to price rent.

1vuio0pswjnm7
2 replies
10h18m

For folks who want to learn how these software developers operate:

Armas v RealPage (ND California)

https://ia801506.us.archive.org/35/items/gov.uscourts.cand.4...

Boelens v RealPage (WD Washington)

https://ia801504.us.archive.org/27/items/gov.uscourts.wawd.3...

Cherry v RealPage (WD Washington)

https://ia601403.us.archive.org/33/items/gov.uscourts.wawd.3...

Corradino v RealPage (SD Florida)

https://ia804709.us.archive.org/0/items/gov.uscourts.flsd.62...

Haynes v RealPage (ND Georgia)

https://ia801203.us.archive.org/14/items/gov.uscourts.gand.3...

Kramer v RealPage (DC)

https://ia904705.us.archive.org/0/items/gov.uscourts.dcd.250...

Lazarte v RealPage (ND California)

https://ia804701.us.archive.org/20/items/gov.uscourts.cand.4...

Marchetti v RealPage (SD Florida)

https://ia801602.us.archive.org/27/items/gov.uscourts.flsd.6...

Morgan v RealPage (WD Washington)

https://ia804709.us.archive.org/25/items/gov.uscourts.wawd.3...

Navarro v RealPage (WD Washington)

https://ia601407.us.archive.org/5/items/gov.uscourts.wawd.31...

Parker v RealPage (SD Florida)

https://ia804709.us.archive.org/15/items/gov.uscourts.flsd.6...

Schmidig v RealPage (ED California)

https://ia601603.us.archive.org/30/items/gov.uscourts.caed.4...

Silverman v RealPage (SD New York)

https://ia601506.us.archive.org/19/items/gov.uscourts.nysd.5...

White v RealPage (Massachusetts)

https://ia601603.us.archive.org/30/items/gov.uscourts.caed.4...

Duffy v Yardi Systems (WD Washington)

https://ia800508.us.archive.org/30/items/gov.uscourts.wawd.3...

Chirino v Yardi Systems (ED Virginia)

https://ia801307.us.archive.org/3/items/gov.uscourts.vaed.54...

jessriedel
0 replies
3h38m

Can you describe what secret info is being shared in those cases? Is it just the rents people are paying?

karmajunkie
1 replies
16h28m

the link at the top of this thread does so.

jessriedel
0 replies
3h46m

It does not

jessriedel
0 replies
2h49m

Right, but I'm asking a more specific question: what is the secret info that they are sharing? Is it just the rents?

Terr_
0 replies
11h4m

Sure, someone can renege on that, but collusion doesn't require that you have an airtight legal contract to bind all parties; after all, such contracts are inherently illegal!

Small nitpick, collusion in a general sense is not illegal, but a price-fixing contract/conspiracy would be a crime under the Sherman Antitrust Act.

HumblyTossed
10 replies
16h13m

I'm naturally going to go onto rental search sites and look at what similar houses in the area are renting for, and probably ask something pretty close to that.

Or, Say I own and house, and I want to rent it out. I would calculate how much I would have to charge for rent for it to be worthwhile to me. Why would I care what anyone else is charging?

bikezen
2 replies
16h3m

You have a duty to your family/pets/shareholders to extract maximum value clearly. /s

I added /s because dear lord this thread is full of people who think its true. Housing shouldnt be an investment venue when we have millions unhoused.

codexb
1 replies
15h43m

That's like saying people shouldn't invest in farms, or pharmacies, or water pumps because there are poor or mentally disabled people who have trouble securing and affording those products.

lupire
0 replies
4h19m

The difference is whether the good in question is being produced by investment, or monopolized by investment. This has been enshrined in law for over a century.

You want to make more money in housing? Build more housing.

tsimionescu
1 replies
10h1m

You can of course advertise at any price you want.

But, if the price you calculate this way is too large, no one will rent your house.

And, if the price you set this way is too low, you're leaving money on the table, which you may or may not be fine with. If the difference is high enough, someone might even pay you the rent you asked for, but then rent it out themselves to someone else for the higher price, and pocket the difference, which you may feel cheated by.

BlueTemplar
0 replies
9h28m

Contracts often forbid sub-renting.

zymhan
0 replies
16h6m

Why would I care what anyone else is charging?

Then you probably shouldn't be participating in this discussion.

refurb
0 replies
15h4m

Because the rental market is detacted from the prices in the ownership market. Rents can be much higher or much lower than the carrying costs of owning.

If you just charge what you need to cover costs you may find yourself with a vacant apartment.

pylua
0 replies
16h7m

Because you want to maximize your profit and get the most from your investment. You also want to see, generally speaking, if it is even reasonable that anyone would to rent out your house at that price

closeparen
0 replies
11h33m

It’s generally good to have an economy where you can just exchange the market price for the thing, vs. the “price” is low but the actual criteria for getting access to stuff is connections, bribes, waiting, luck, conformity, etc.

bluGill
0 replies
11h7m

Generally when you first build / buy a property the market rent is below your calculated needed rent. however with time you pay the property off and inflation raises the amount the market allows you charge. Thus you need to follow the market price and invest for the long term. In year 40, you can charge below market rent and be fine, but until then you haxe to charge as much as the market allows to break even vs other investments.

ThrustVectoring
6 replies
15h41m

You're over-emphasizing the methods by which these people are price-fixing, rather than the result. The result is a price higher than the market-clearing price that is low enough to find tenancy for all housing. Any scheme to generate excess profit by raising rent above this price is (or ought to be) illegal, whether it's colluding to do price fixing, using some algorithm to price-fix, or monopolizing the market.

tsimionescu
1 replies
10h30m

The FTC is claiming the exact opposite, basically.

Colluding to fix prices, by any means, is illegal. It is still illegal even if the scheme is only followed by a handful of those who "agreed" to it. It is still illegal if it utterly fails to control the price and thus has no material impact.

It's like trying to scam people. You're not allowed to try to defraud people. It doesn't matter if your scam is so bad that it would cost you more money to execute than you would get out of it, and it doesn't matter if no one engages with your scam at all: what you were doing is still illegal.

lupire
0 replies
4h26m

FTC would not be interested if the scheme hypothetically somehow had no effect. They said that it is still be illegal even if it is imperfect. Empirical reality still gets a vote, for pragmatic reasons.

closeparen
1 replies
11h49m

All store owners should be jailed, then, since the presence of inventory on their shelves is proof of a scheme to generate excess profit by charging higher than market-clearing prices - or it would have sold already.

bluGill
0 replies
11h15m

We only know current inventory. As I write this in early March stores are starting to order their halloween candy (the orders need to be in by somethime in april). You do not know what candy your competitor will order, but this is relavant to sales since you will price match their ads and in turn lower priced candy will sell in greater quantities.

HDThoreaun
1 replies
1h49m

The result is a price higher than the market-clearing price that is low enough to find tenancy for all housing

This is impossible. If all the units are rented then by definition the market clearing price is being charged. The collusion comes when landlords start leaving units vacant.

closeparen
0 replies
38m

Vacancy is a normal part of the rental market: after a tenant moves out there’s a period of cleaning and repainting, perhaps a more intense renovation, then showing to new prospective tenants, then after a lease is signed but before the new tenant actually moves in. Markets with the fastest-growing rent and the most concern about greed/gentrification/etc have lower than average vacancy.

Which makes sense: the general structure of the housing crisis is tenants are unable to find vacant apartments to rent at the prices they’re comfortable with. Competition between tenants is steep. The end of the housing crisis would look like a big spike in vacancy as a reversal of this dynamic: landlords unable to find tenants for their vacant units at prices they’re comfortable with.

turquoisevar
4 replies
16h51m

This is why nuance and details are key in legal matters and where the sum is greater than the parts. Where the line gets drawn is often unclear and is often a matter of “I know it when I see it”.

Just individually comparing prices isn’t an issue.

What does become an issue is if (at least) all of the following are met.

- You use an algorithm service does automates all of this

- This algorithm uses both public and private data

- The algorithm is ubiquitous and widely used by almost every relevant market player

- The algorithm tells all users to not negotiate and the users abide by this recommendation

- All of the above has a noticeable effect on the market to the detriment of a big demographic of market participants

tsimionescu
2 replies
10h17m

Per the FTC filing, many of these are not relevant for deciding if illegal price fixing has occurred.

It doesn't matter how the algorithm operates. If all landlords in an area publically agree that they will set rent prices at 400xx the price of a coke can, they are only using public information, but still engaged in price fixing.

It doesn't matter how many people actually use the algorithm. If you try to start a cartel to do price fixing and only succeed in convincing two of your 50 competitors to participate, you've still engaged in illegal price fixing.

It doesn't matter if individual price negotiation happens or not. If a bunch of companies agree to set the same list price, but also agree that they can offer deals to their customers, they are still engaging in illegal price fixing.

It doesn't matter if the scheme actually succeeds in changing the prices. If two companies meet and agree to set prices at a certain value, but then they backstabber each other and undercut the agreed price, or simply other companies in the space who were not part of the scheme have too much market power to allow prices to change, the original companies still agreed to an illegal price fixing scheme and are guilty.

All of the above will probably have a massive impact on the amount of damages and so on. But they have no bearing on the verdict, as the FTC lays out at length in the filing they link from the article. And this is not speculation, it is established case law.

chii
1 replies
4h18m

meet and agree to set prices at a certain value

so the question becomes what it means to "meet and agree".

If these companies never communicated, and all came to the same conclusion of a price floor (that happens to all be the same), then how can it be price fixing?

To me, price fixing require that the parties agree (explicitly, or implicitly with punishment) to _not_ lower the price regardless of the lack of sales. It is not enough to have the same price (however that price comes about is irrelevant).

tsimionescu
0 replies
3h53m

If they can prove they never met otherwise agreed on a price, but they just happened to take the same decision, then yes, it's not price fixing.

But if they are using the same third party that is telling explicitly telling them "your price should be this", then it's quite clear that they have agreed on the same price. Doing so indirectly doesn't make it any better.

chii
0 replies
4h23m

- The algorithm tells all users to not negotiate and the users abide by this recommendation

that is the only relevant part that makes it price fixing.

lowbloodsugar
3 replies
16h3m

If you own a house and it sits empty for a year because an algorithm told you you could get more for it, you’re an idiot. If you use an algorithm to effectively collude with others and you fail to rent your house but keep rents artificially high, then you an idiot and a criminal.

lozenge
0 replies
7h12m

I don't think it suggested leaving places empty for a year. Rather they wanted to spread out lease renewals. If everybody's lease ends in September then your property is competing with a lot of others. Whereas if you keep it empty until February then offer a 12 month lease, your renter will have much fewer choices and is more likely to stay (despite your demand of a high rent increase).

bluGill
0 replies
11h5m

If you own 100 houses to rent it is already known you should have a few empty at all times.

FireBeyond
0 replies
48m

This generally isn't targeted at single property homeowners/landlords.

RealPage says if you have a portfolio of apartments, that following their recommendations will generate you more overall, regardless of occupancy. Their algorithm literally is "it is better to rent out 19 units at $X, when the demand will drop to 0.94X if there's 20 available". And it can do so because it happens to know that the other 80 units on the market with other landlords will be following the same rule.

dkjaudyeqooe
3 replies
17h47m

1. I'm going to use this pricing service.

2. I'm not going to deviate from what it tells me.

3. I know everyone else (who matters) is using this service in the same way.

hnburnsy
2 replies
14h50m

What amazed me was that sometimes the recommendation from the software was to not lease a unit to anyone.

bluGill
1 replies
11h13m

you should always have a unit not leased so that you can lease it to someone who needs it now and is willing to pay. If you only have a few units though you will never hit that point where the theory is worth the risk the desperite person comes along.

lupire
0 replies
4h23m

Why would that desperate person be willing to pay the xN premium needed to cover the idle time? Why would there be exactly one desperate person in the market? You need a curve, charging more as the space fills up. Desperate renters don't have infinite money. People with money are the people who are not desperate, because they have flexible options.

aaomidi
3 replies
18h2m

The issue is, you're one person doing this manually. That means there's also a ton of people who don't.

This algorithm, unlike a single person, ends up taking over entire cities, which means now there is no supply & demand. There is supply, and all that supply is effectively the same number.

Demand has no other choice other than meet the supply where they are. It's either that or being without a house.

theragra
2 replies
17h37m

What if there are multiple vendors selling algorithms? Open source bots doing this? How many bots is a collusion?

polygamous_bat
0 replies
16h59m

Even if you’re talking to your next door landlord and coming up with a joint price, it’s collusion.

dragonwriter
0 replies
14h7m

What if there are multiple vendors selling algorithms?

Then each vendor’s customers may constitute a small price fixing conspiracy, which is still illegal (price fixing doesn’t have a market threshold before it is illegal) but also a lot less effective, so it probably would be a transitory condition even if it didn’t get punished.

nkrisc
1 replies
15h14m

I won’t belabor the point others have made, but if the end result is price fixing, it’s price fixing.

The law isn’t code and it is open to interpretation and intent and outcomes matter, sometimes more than the methods.

lupire
0 replies
4h26m

So the law is an AI model :-)

bostik
1 replies
9h33m

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.

ethbr1
0 replies
4h15m

I guess the other way of looking at it is:

What is the value of subscribing to a pricing service where you have no idea how your competitors are using the numbers (over-, match-, under-price)?

Versus what is the value of same, if you know your competitors never under-price?

That value difference is the value of running a cartel.

mu53
0 replies
6h30m

Pulled from the Sherman Act, Section 1. Available on wikipedia

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal

It is written in a general way to catch all problems going into the future. The problem is translating this to case law. Often judges ask the question "Is this bad for the consumer?" If rents are rising faster than inflation with more consumers becoming homeless citing cost of rent while vacancy rates are increasing, the market is bad for the consumer and the country.

kevin_thibedeau
0 replies
1h44m

Your acting on independent research doesn't distort the market. If you directly or indirectly control pricing in 30% of housing stock you can drive prices up incrementally because you have influence on every lease offer in that population.

hnburnsy
0 replies
15h0m

Prices on rental search sites are wishes not actually leased costs and would be missing things like the term, pets, and incentives.

cyanydeez
0 replies
2h6m

it was illegal. making a mechanical turk to kill people doesn't free the turk from a crime.

MagicMoonlight
0 replies
22m

Imagine you are Microsoft and you want to collude with Amazon to rig compute prices.

You both agree to follow the recommendations of an unbiased Amasoft Price Calculator tool. This tool uses an advanced algorithm looking at thousands of data points and always returns the same price, $10000 per month.

You both follow this independent tool and end up pricing it the same. Is this a fair system? You’re both subscribing to an algorithm.

FireBeyond
0 replies
12h1m

The service also requires you to go with their recommendation 95% of the time, and at a certain point requires you to go with their recommendation, and you can only "request an override" that RP can allow or deny at their discretion (of course, they can't enforce it, other than to kick you off their service, with no refund).

dkjaudyeqooe
6 replies
17h49m

One of the algorithm’s developers told ProPublica that leasing agents had “too much empathy” compared to computer generated pricing."

That's true by definition. What's shocking is that the developers want to replace leasing agents with a sociopath.

Espressosaurus
2 replies
17h43m

Why is that shocking? It's not just laundering the price fixing, it's laundering the guilt.

dkjaudyeqooe
1 replies
17h22m

Shocking that he figures that the right amount of empathy is zero (see toomuchtodo's comment).

ClumsyPilot
0 replies
17h5m

Seems fairly typical of software developers drunk on cool aid

toomuchtodo
1 replies
17h29m

The developer in this case is the sociopath. Not uncommon.

Espressosaurus
0 replies
16h42m

It's a banality of evil situation for the developer and their entire chain of command.

voidfunc
0 replies
14h35m

This is shocking? You're kidding right?

refurb
5 replies
15h9m

But YieldStar is just automating what every landlord does anyways - looks at comparables. And large rental corporations can get pretty sophisticated in data analysis.

So the FTC says "price fixing by algorithm is still price fixing". If I scrap rental data from a website and then determine my own rental price, is that price fixing? Doesn't seem to me.

vineyardmike
1 replies
15h6m

What’s missing from your view is the scope. yield star is provided the same data to a large chunk of the market (in some rental markets). Going online and looking at comparables isn’t one company setting the price for every market participant.

tsimionescu
0 replies
9h57m

The scope isn't exactly what's important. Whether their selling to 80% of the market, 1% of the market, or even just to 2 competing landlords, what they're doing is still price fixing.

The only thing that's legal is doing your own pricing research, using your own methods. You can hire a consultant to do this for you, but this burden then transfers to them: they can't consult for multiple competing businesses.

heroprotagonist
1 replies
14h32m

Well, yes, if you continuously adjust your prices to match your competitors, rather than basing your changes on other factors (changes in maintenance expenses, inflation, property values as a whole, changes in area demographics like crime rate, school quality, walkability, availability of services, etc), and you do this at the same time they do, then that can be an indicator to the law that you're engaging in price fixing.

But it's not the only indicator, and likely is insufficient on its own if you don't have significant enough share of the local market for changes in the prices you make to ripple outwards to smaller players. It's hard enough to get them to go after the big players, so they won't go after you.

Usually price fixing requires multiple indicators. The law doesn't have to prove that Bob is talking with Alice and prove that they're discussing how to raise rents with each other. Prosecutors just need to demonstrate that Bob and Alice are both doing the same things, around the same time, which contribute towards artificial increases.

As players get larger, their policies and procedures have greater impact over an area. Their practices get more scrutiny because of this greater impact. That's one (of many) reasons we see large companies spread themselves to multiple cities. While nobody bothers when someone who rents a dozen units uses algorithms to set their prices, they start to notice more when it's thousands of units all concentrated in a single area.

When you get to a position where 4-5 companies can significantly inflate prices for a city with millions of people, how they behave is important.

There are other tricks they use beyond third party algorithmic engagement.

Consider this:

If only 30% of the rental market engage in a laddered renewal scheme where they push renters towards always renewing within the same 2 month period of the year (via 10 or 14 month renewals that are more financially viable than 12 month renewals, or are simply the only option for renewal until the renter is within that two month period) and also add significant lease penalties for breaking out of that schedule, it takes less than a decade to reach a point where 90+% of rentals are renewing within the same two months every year.

And what does that do? It artificially constricts supply (nobody releases their lease until they've found a new apartment, so many units are not displayed as available or need to be accepted sight-unseen) and artificially inflates demand (everybody is looking during this same time period).

The result is artificially increased rent. Which has a side effect of inflating bubbles in the housing market. That may _seem_ good for property owners, as they can sell their houses for more. For a time, until the next pop that everyone blames on lenders with dodgy loan acceptance criteria or other criteria. Until then, homeowners pay inflated property taxes. They might overextend their mortgage with the new perceived value of their home that may eventually drop, etc.

The point is: rental price fixing is real and deliberate, large players with greater impact know better but do it anyway, and this is not the only trick they use. It's just the one they've currently stepped far enough over the line on to get caught at.

tsimionescu
0 replies
9h49m

The law doesn't have to prove that Bob is talking with Alice and prove that they're discussing how to raise rents with each other. Prosecutors just need to demonstrate that Bob and Alice are both doing the same things, around the same time, which contribute towards artificial increases.

While you're right about how regulators typically approach this, it's also important to note that the converse is also true. That is, if they happen to get clear proof that Alice and Bob agreed together to raise rents, then it doesn't matter if they actually succeeded in increasing rents in the area, and it doesn't even matter if they didn't follow through with the agreement: the agreement itself was illegal, and they would get an easy win in court (though damages may be low if the material impact was low, so the case may still not be worth pursuing).

It is typically very rare for such direct evidence of collusion to exist, and thus indirect evidence like you suggest is normally how this is investigated.

However, RealPage and the others here have provided this evidence directly: the way their price recommendation service is structured, the terms and conditions and so on, constitute direct evidence of an explicit attempt at price fixing. So, even if it turned out that all of landlords participating in this scheme actually "cheated" the price recommendation algorithm, and even if it turned out that rents went down or stayed the same when RealPage moved in, they would still be guilty of price fixing, per the FTC.

bcrosby95
0 replies
12h44m

If you scrape rental data, then send an email to every person renting a unit saying "I recommend you allow your unit to sit vacant rather than renting below this price", that would be price fixing.

anomaloustho
1 replies
2h19m

I worked on a direct competitor to YieldStar and we had very high parity to YieldStar before we were acquired by Realpage. At least, the discussions at my smaller company pre-acquisition about negotiating price was that one unfortunate mis-negotiation could result in a Fair Housing incident (legitimate or not)

For example - Tenant 1 of racial profile X walks through the door and is a good negotiator. Tenant 2 of racial profile Y walks through the door and doesn’t negotiate. Tenant 2 finds out about Tenant 1 and opens a discrimination case under FHA.

At least the culture at my smaller company was to do everything to steer the rental property away from potential Fair Housing incidents. However, we did learn while working on the competing YieldStar product that the simple act of removing the negotiations caused a big knock-on effect of creating a revenue increase. That kind of put a bad taste in our mouths, because we didn’t like the fact that it wasn’t the software that was causing the increase so much as the pre-requisite of stopping negotiations. We started experimenting with how to improve the algorithm even more and if it could create bigger gains that drove more product value than simply the “don’t negotiate” effect. But we were then acquired by Realpage.

There are other ways these algorithms discriminate indirectly. For example, these algorithms tend to dial up prices around holidays like Christmas. And they do that because anyone who wants to sign a lease around the holidays has a much higher percentage chance of having some sort of life turmoil. (like maybe a family fight broke out or abuse happened on Christmas that caused someone to move out) From a business standpoint, the rental property would argue, “Someone in a bad way has a statistically more significant chance of also causing undo cost increases or breaking leases early.” — so the algorithm cranks up the prices to make up for potential costs.

Dialed up at the level and scope of industry control that Realpage has gained over the years, then you encounter all kinds of other issues.

The other perspective that these products take is they look at the short term rental industry like hotels and AirBnB. The business approaches by wondering, “Why can’t long term rentals be as technologically sophisticated as the short term rental industry. Let’s create a product that brings long term rentals automation into this decade” and the issue you run into is that short term rentals have 30x-100x the data points that you have. So it creates a gravity towards reaching into as many data points as you possibly can in order to make the product half as compelling, which includes reaching into your own internal data.

wholinator2
0 replies
1h51m

How did you feel about all of that personally? What was the culture inside a company like that?

From the outside, i couldn't possibly imagine any person who's ever had trouble making rent playing along while their company was unnecessarily inflicting that pain on large numbers of other people. Yes, when a company is running things they'll do what they can to avoid lawsuits, even if that is "become a soulless algorithmic profit extractor". But businesses are made of people. Was there anyone in the company that had a problem with it?

FireBeyond
1 replies
12h2m

RealPage discourages bargaining with renters

It's more than 'discourage'.

RealPage considers (their own words) landlords to be "cheating" when they deviate from the recommended rates.

Landlords are contractually obligated to follow RP recommendations 95%+ of the time:

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.

RealPage is simple fucking cartel software.

lupire
0 replies
4h17m

This is blatant flouting of the law in confidence that the government will collude. Elections have consequences.

Guest42
0 replies
5h10m

The usage of this algorithm prevents the lowering of prices by simply building more units as the occupancy rate can simply be adjusted.

kirse
94 replies
20h8m

After pricing auto insurance recently it's pretty obvious this is happening in that industry as well. While shopping around multiple quotes across 7-8 providers and calling at least 5 separate insurance agents to try to gather quotes, all of these companies are providing similar quotes within a few cents/dollars of each other.

I vent my frustration to a few agents about the yearly rate increase insanity and they all shrug, give their non-empathetic "I understand" telephone script and blame it on the "system" calculating the prices and make some useless excuse about inflation.

I've got a clean driving record, a fully paid-off cheap vehicle, in a reasonably responsible age bracket, and the cost of decent auto insurance these days is essentially another car payment. Within 5 years I'll have paid back the insurance company 60-70% the value of the vehicle. The Gov/FTC needs to take a look at these companies, especially if they're forcing us to hold the insurance to reasonably participate in society.

ejb999
27 replies
19h13m

The fact that you car is 'cheap', is not the driving force behind the cost - you may drive a $10K used car, but you can still crash into someone else's $120K car and also put the other driver in the hospital with 100's of thousands of dollars of medical expenses.

Once your car is paid off, you can usually drop the collision damage on your own car - but don't be surprised if you are still paying thru the nose.

Curious though: what state are you in, and how much are you paying?

As comparison, we own three cars (2015, 2013 and 2011), for three drivers (youngest is 21) and have pretty decent level of coverage, including coverage for damage to our cars even though they are paid off - and only pay ~$1600/year in total for all three cars/drivers in Mass, which to me seems pretty reasonable.

tomrod
20 replies
18h21m

not the driving force behind the cost

Great. Socialize healthcare as the current non-single-payor market is forcing all sorts of market distortions in unrelated markets, AND fix the price fixing. Win win win.

ED: adding clarity for the call for socializing healthcare to dampen the massive price distortions in other markets.

maxboone
12 replies
18h5m

Healthcare is socialized in Europe and car insurance is still similarly priced (750 - 1500 per year, average in NL is 950 per car for only liability) mostly due to liability costs.

Required insurance covers € 7.5 million for personal injury, € 2.5 million for property damages.

Edit: P.S. I am in favor of single-payer healthcare, I just don't think that is the particular cause of expensive liability car insurance - rather personal injury and property damages would seem a larger driver to me.

margalabargala
5 replies
18h0m

This is interesting to me, an American unfamiliar with European systems.

Required insurance covers € 7.5 million for personal injury

So in Europe (or at least some parts of Europe with otherwise socialized healthcare?), if someone is injured in a car accident, their medical bills are paid for by the insurance of the person who hit them, and not that country's single-payer system?

InsomniacL
1 replies
17h45m

The injured party may decide to receive treatment though a private facilitate and recoup the cost from the insurer.

Regardless, if I loose my leg through the negligence of someone else, paying for the amputation isn't going to make me 'whole' again.

you'd have to put a literal price on my leg.

tomrod
0 replies
16h13m

I believe the phrase of art for this is value of statistical life.

orwin
0 replies
17h22m

I think in my country, the single-payer system is still linked to an individual, by his social security number, so the culprit's insurance will "pay", even though what will be paid in healthcare will mostly be aestethics or other non-reimbursable. But mainly, it will pay for damages. In my country, f you are hurt in a car accident, you can be paid depending on your average salary and invalidity percentage, called an "invalidity rent". If docotr estimate you're invalid at 80%, you'll get paid 80% of your last month salary until they check on you again, then if you're 40% invalid its 40% of your salary (before the accident, even if it was years before)... up until you're fine. I think they have to give you at least 10% as long as you have sequellas, even minor ones. That, plus fixed damages (between 5k and like 40k).

It isn't perfect. It doesn't take into account missed career oportunities, inflation, the pain, or mental issues. But you can work besides the money they give you, and oftentime, you'll get the 10% for a long time, because paresthesias (whatever that thing is spelled in english) and small sequellas can stay for a long time (I know soemone who earn roughly 200€ per month, but she has trouble working in most kitchens now. She used the main check to get into academia though, and will probably end up with a master's degree for her troubles).

maxboone
0 replies
17h54m

No, those are not billed to the person who caused the injury.

The personal injury part is meant to compensate for personal injury, such as "compensation" for becoming unable to work, or live the same way as before.

lozenge
0 replies
6h58m

I'm in the UK so we don't have "medical bills", the hospital doesn't have a billing system. There is one they dust off for international patients, and there is internal billing between regional and local organisations, but these bills aren't attached to individual patients. Edit: to be clear, this is unlike most European countries which still have multiple health insurance providers, but the health insurance is almost entirely government paid. The UK doesn't have health insurance, the government directly funds and runs the healthcare providers.

Still the insurance needs to cover loss of income, private care when NHS care is not fast enough, and "general damages" ("This covers the pain and suffering you have gone through and the [non financial] impact the injury or illness has had on your life")

Retric
5 replies
17h54m

Car insurance in Europe averages ~1050 USD/year, US averages edit: $2,545 USD/year that's a huge difference IMO.

maxboone
4 replies
17h54m

Even when you put it next to the average (or better, modal) wages?

tomrod
2 replies
17h48m

Yep. Median wage in Belgium is ~3.5k euro / month, equivalent to ~3.8k USD / month. Median US wage is ~4.9k/month, about 30% higher, certainly not 150% higher.

orwin
1 replies
17h15m

Belgium is definitely an outlier. It's 2k after taxes and contribution in France (so like 2.9k/3.1k if you are working for the state or a private company)

tomrod
0 replies
16h39m

The other comment thread walked through the UK example as well. American insurance is over priced.

Retric
0 replies
17h43m

Yea, though wages and rates vary enough it's worth looking at individual countries.

England is an outlier. Average wage works out to 44,252.67 USD (£34,963/year) vs US is at 70,248.63.

Average car insurance in England is 710.06 USD (£561/year) vs 2,545 USD in United States.

timy2shoes
6 replies
18h17m

Socialize healthcare as it is forcing all sorts of market distortions

I don't understand how you come to this conclusion. Can you explain?

margalabargala
4 replies
18h13m

If a large portion of the cost of auto insurance is to pay for potential injuries to someone that you hit, then we can conclude 1) single-payer healthcare would significantly lower the cost of auto insurance, and conversely, 2) the lack of single-payer healthcare is a significant contributor to the current state of auto insurance markets/pricing.

timy2shoes
2 replies
18h11m

I completely agree with your assessment and logic, but the parent posted suggested that socialization of healthcare (e.g. ObamaCare) is contributing to auto rates. That I don't understand.

margalabargala
1 replies
18h3m

Looking again, I think their comment can be parsed in multiple ways.

Socialize healthcare as it is forcing all sorts of market distortions in unrelated markets

I interpreted that as a call to socialize healthcare, not a description of market effects that "socialized healthcare" has to the extent that exists in the US.

tomrod
0 replies
17h51m

Your interpretation of what I posted is correct. My apologies for the lack of clarity. Comment has been edited.

SoftTalker
0 replies
17h53m

No, because injury claims also include lost income, compensation for disability, pain and suffering, etc. not just medical expenses.

morkalork
0 replies
18h10m

It makes sense with some extra punctuation: Great. Socialize healthcare. As it, is blah blah.

If you want even cheaper car insurance, you can even go beyond socialized healthcare. You can have socialized car insurance! Or in some cases a hybrid system where you insure your vehicle but not all trauma and damage to the other party. But I don't think Americans would be a-okay with seeing a government employed doctor when they make their injury claims. Even if outcomes are better than a purely private system.

Retric
4 replies
17h57m

The national annual average for car insurance is $2,545 per year for full coverage and $741 per year for minimum coverage.

Massachusetts is a severe outlier in terms of car insurance and your well below the norm. MA averages 1646/person/year vs 3950/person/year in Florida. https://www.bankrate.com/insurance/car/states/#average-car-i...

MaKey
2 replies
17h44m

How come car insurance is so expensive in the US? In Europe it's vastly cheaper and the policies themselves are much better.

lozenge
0 replies
7h4m

Well traffic deaths per capita are about double in the US so that probably carries over to other insurance-triggering incidents.

Retric
0 replies
17h40m

I don't know the exact calculations but people in Europe have nationalized healthcare, more easily lose their license, drive less, and generally have smaller and cheaper vehicles.

ejb999
0 replies
17h55m

Yikes! That is quite expensive compared to what I pay.

orwin
0 replies
17h41m

I think the average cost per year per person in my country is 1500€, so it is actually way cheaper than what i expected for the US.

sroussey
24 replies
19h56m

Insurance is based on the cars you may hit that are not your own. Prices have been going up. So not surprised.

seanmcdirmid
17 replies
19h53m

Liability insurance is based on other people’s cars. Comprehensive and collision is based on your own car.

Scoundreller
9 replies
19h26m

Liability insurance is based on other people’s cars.

This is what I dislike about insurance. If someone hits my (hypothetical) $100k car and ruins it, I win $100k, but if someone hits my $1k car, I only win $1k.

Yet the person that hit me did precisely the same action/error.

lotsofpulp
2 replies
19h24m

Insurance is not a punitive fine or lottery. If someone drives into your house and causes $100k in damage, you would also get $100k (assuming the minimum legal coverage is that high, which it might very well not be in many or even all states).

I specifically recall New Jersey letting poorer people drive “insured” by letting them purchase insurance for effectively fender benders, and if they caused more damage, good luck pursuing them.

Scoundreller
1 replies
19h21m

Insurance is not a punitive fine or lottery

It functions as one, regardless of intentions.

You could also look at this the other way: the person driving the rust-bucket with 0 functioning airbags might win more injury compensation than the individual driving something solid with 9 airbags and walks away.

Horffupolde
0 replies
19h4m

That’s called moral hazard.

kelnos
1 replies
18h28m

Why do you dislike that? The purpose of insurance is to help protect against losses. If you don't have a $100k car, you can't lose it.

And this is reflected in your insurance premium. The cost to insure your own car is lower if you have a less expensive car.

I do, however, think it's a bit unfair if you have to pay more for liability insurance because other people have chosen to buy more expensive cars.

Scoundreller
0 replies
16h52m

think it's a bit unfair if you have to pay more for liability insurance because other people have chosen to buy more expensive cars

Yes, this. You can opt-out of insurance for your own vehicle if you want, but generally required to buy some minimum for everyone else's property that might be involved.

eiderman
1 replies
19h4m

A big problem at the lower end is that insurance companies don't value cars based on their utility. I have a well maintained older car that is reliable and I trust the work that has been done, but it would be valued at around $2k by insurance. In order to buy a car with similar reliability would be closer to $5k. If someone else hits my car, it will be probably totaled at current repair prices and so I will have lost ~$3k.

Scoundreller
0 replies
18h43m

Indeed, it doesn't take much damage for the insurance company to declare a low-end vehicle a total loss and salvage it instead of repairing. Could be just cosmetic damage and you find yourself in that problem.

As a result, I don't pay for coverage for my own vehicle in case I'm at fault. My jurisdiction now lets me opt-out of repair coverage others are at fault, but I couldn't stomach that. I think it's just for rental car cos that have their own repair facilities and to avoid ever getting a salvage title.

vkou
0 replies
19h11m

The point of insurance is to make you whole, not to make you better off.

If it did, you'd have more incentives for insurance fraud.

(Also it's the other guy's insurance that pays for it, and if the insurance industry disappeared overnight, and you had to sue for damages directly, no judge would award you more than the damages you sustained. (For an honest accident.))

jrockway
0 replies
17h49m

This doesn't bother me. It's about making you whole after random events. It's better to imagine a meteor hitting your car. If it turns your $100k car into a crater, you have a $100k car afterwards. If it turns your $10k car into a crater, you have a $10k car afterwards. If the meteor hits a big open field, you still have your car. It's like meteors no longer exist, so you no longer need to worry about them. That's all insurance is.

xapata
5 replies
19h40m

Liability is more about medical costs, no? If it were bounded to vehicle cost, I'd self-insure.

seanmcdirmid
2 replies
19h35m

I’m sure car insurers pay out significantly more for vehicle damage than person damage. Most accidents don’t involve harm, but body shops are getting expensive. For WA:

In 2019, there were 45,524 reported car accidents in Washington State. Although 32,106 resulted in no injuries, 325 were fatal and 973 resulted in serious injuries.

https://www.weierlaw.com/dealing-with-an-auto-accident-in-wa....

bombcar
1 replies
18h51m

The first dollar of insurance coverage is the most expensive, because any claim hits it.

Going from $100k to $2m is often quite cheap, comparatively.

seanmcdirmid
0 replies
17h43m

The number of claims over $100k are much less frequent, which is why it is cheaper to raise your cap.

Marsymars
1 replies
18h1m

I've wondered what happens if I have an at-fault collision where I total a hypercar whose value exceeds my maxed-out $2 million liability coverage. Can the car owner come after me for the difference?

toast0
0 replies
16h48m

Yes, you're ultimately liable for damages you cause.

I would expect your insurance to ask the damaged party to release you from further liability as a condition of accepting settlement at the coverage limits, but if the damages are significantly over the coverage limits and it seems likely that they could significantly collect on a judgement beyond your coverage, it's a possibility.

Umbrella insurance can go up to much higher limits ($2M is maybe already be an umbrella policy), sometimes up to $10M is easy to get, and depending on your insurer, often the upper millions are much less expensive. The tail risk is pretty small. If you're worried about it, may as well ask for quotes at $5M and $10M.

SoftTalker
0 replies
18h16m

It's based on a whole lot of things. Drivers of Ford Mustangs may be involved in more accidents than drivers of Toyota Corollas. The number of miles you drive, and for what purpose, and your personal accident history, and your age and sex and marital status and whether you live in an area with snow and ice in the wintertime or not, all factor in to the rate you are charged.

akira2501
4 replies
19h28m

Insurance is based on the coverage I purchase. Are you saying the insurance company is instead selling me an unlimited amount of liability based on the price of _other_ cars and not the $50k of coverage that I selected when I bought the policy?

How is that justified? $50k is $50k.

mattkrause
3 replies
19h14m

Perhaps it would make more sense to think of it as buying “up to $50k”;they’re certainly not paying out the whole amount every time.

If more expensive cars leads to more expensive claims on average, the price of insurance might reasonably go up even if the worst-case exposure is the same…

Ekaros
1 replies
19h8m

I wonder if the spike in prices of used cars have also affected this. If average "book value" of car has gone up, then the write off cost has also gone up substantially. So cars might be same, but their value is now substantially higher, while still being under the 50k.

Scoundreller
0 replies
18h32m

Used cars went up in value because new cars went up in value. There's no sudden interest in driving used.

akira2501
0 replies
18h44m

It does somewhat but that coverage also extends to medical injuries that I may cause. Those costs have been skyrocketing for years without seeming like they made a similar impact in insurance prices.

I guess underwriting is less a game of building an appropriate liability shield but undercutting that liability shield as much as is profitable without at the same time bringing the company into insolvency.

I had always wished the idea of "open source" would have translated to some of these industries. Particularly given the level of technology available, instead of making the system easier to use and more transparent, they've made the easier to manipulate while blinding the consumer to any part of the process.

dylan604
0 replies
19h33m

The price to repair cars are also going up which is making the payout claims cutting into profit margins. So the solution is obvious

spencerchubb
12 replies
19h20m

I work in insurance. Most states have a Department of Insurance who approves price changes. Insurance prices are calculated using simple features, such as "If car is from year 2016, then multiply price by x"

However, the numbers are not publicized because they don't want competitors to have that info.

Another fun fact, a lot of people wonder, "Why doesn't an AI startup just disrupt the insurance industry?" It's because the Departments of Insurance have to understand the price formulas. Neural networks are infamously hard to interpret, so we would have to reform regulations before we can use neural nets.

robocat
6 replies
19h6m

Why doesn't an AI startup just disrupt the insurance industry?

Also insurance requires that the insurer discriminate a good driver from a poor driver. However they should not discriminate against a protected status.

Good luck setting up a system that can only discriminate using some signals and not others.

It is a good mental exercise trying to think of ways to set up a startup that can discriminate without being obvious about it.

lotsofpulp
5 replies
18h59m

Good luck setting up a system that can only discriminate using some signals and not others.

This is the current system.

thwarted
4 replies
18h56m

And an AI based system wouldn't correct that, it would only make it even more opaque.

jandrese
3 replies
18h30m

The requirement isn't to avoid discrimination, it is to not get caught. That somewhat opaque "AI" layer is great for that.

tomrod
0 replies
18h17m

Nah, there are some nice metrics to capture disparate impact between categories. Check out Microsoft's fairlearn library some time.

CydeWeys
0 replies
18h26m

And if it's actually systematically charging e.g. a specific minority more than other people, it will get caught in a hurry and end up being hugely costly for the company.

This kind of stuff is easy to catch. A single person typing some different parameters into an insurance quote webpage can catch it.

BlueTemplar
0 replies
9h2m

Until you are forced to explain exactly how your helper algorithm came to that conclusion, explaining the logic and calculations step by step in easy to understand language... (With the "I can't" not being an acceptable answer.)

wolverine876
0 replies
18h0m

I'm not sure what that means: How does that explain the widespread and large price increases, and the GP's experience?

tomrod
0 replies
18h18m

Why doesn't an AI startup just disrupt the insurance industry?

More than this, it's a fundamental misunderstanding of what AI is and what it can do to ask this sort of question.

Best thing I've seen come on the market was Root, based in Columbus and founded by a former Finance director from Nationwide insurance. It used your cell phone to send telemetry signal to classify your driving behavior.

thwarted
0 replies
18h57m

It's because the Departments of Insurance have to understand the price formulas. Neural networks are infamously hard to interpret, so we would have to reform regulations before we can use neural nets.

I'd like to know that the methodology is understandable and defensable and correctable, and having "an AI startup" disrupt with neural networks isn't going to do that. At best it will just be another excuse used to justify the state of the industry, "the computer said it so it must be right". Reforming regulations so it can be made even less transparent is not the way to go.

phonon
0 replies
17h58m

the numbers are not publicized because they don't want competitors to have that info.

What do you mean? Pricing is all publically available (sometimes not all the details that feed into the model that create the pricing tables.) You can search SERFF by carrier, by line, by State, and read the actuarial filings.

Most of the time, pricing is refined by looking at prior year(s) losses, and adjusting. You go to the State, explain how much you've been losing, and they review. All that correspondence is public as well.

nerdponx
0 replies
18h12m

What's interesting though is that while pricing is strictly regulated, underwriting is significantly less regulated, at least in P&C commercial insurance. Insurance companies have been exploring the use of ML and AI for that task since at least 2017, when I got a job doing precisely that.

Also, things like machine learning for image recognition in claim photos, satellite data, etc. has also been in use for at least the same amount of time.

I believe the Lemonade renters insurance product also does some kind of "AI" claims processing. I wouldn't know what that looks like, my focus when I was in insurance was solely in underwriting.

tpmoney
3 replies
20h1m

Aren't most insurance rates / rate ranges set by the states? And any further variance is down to the actuarial tables? It seems pretty reasonable that most of your quotes would be within a few dollars of each other because they're all insuring the same risk, in the same location, under the same legal framework.

kirse
2 replies
19h55m

Aren't most insurance rates / rate ranges set by the states? And any further variance is down to the actuarial tables?

If that's true, I certainly couldn't find a table on allowable rate ranges when I did some basic research on pricing and what factors influence it. Certainly open to being schooled on how auto insurance works.

phonon
1 replies
17h48m

It's all publically available.

Filings are done through the SERFF system.

So Google SERFF and say "NY". (which will take you to https://filingaccess.serff.com/sfa/home/NY )

Then search by carrier, line of business etc. You want "rate" filings. You will find a report by an actuary, lots of justification explaining price changes, correspondence between the company and regulators asking/answering questions, details on how the rate changes will affect current customers, etc.

SInce most rate filings are to adjust current in force rates, they don't always repeat all the underlying details. With a little more effort you can look up initial rate filings, and they will walk through methodologies in more detail.

Once those prices are filed, they are locked in (for consumer types of insurance). Companies can't deviate in any way. (including giving unauthorized discounts).

kirse
0 replies
15h12m

This is great and really well organized, thanks for sharing!

vkou
2 replies
19h13m

You're not paying to insure the car, you're paying to insure yourself against a crash where you land someone with a 5-million dollar hospital and lifelong disability bill.

The price of a car is trivial compared to the price of a person.

lotsofpulp
1 replies
18h56m

I don’t think I have seen more than $500k liability coverage, at least not in the drop down menus when shopping for auton liability insurance.

$5M is firmly in umbrella insurance or suing the at fault driver territory.

bombcar
0 replies
18h49m

They won’t sell you umbrella until you max the other policies, but at some point you’re not paying against future judgements you’re paying against the future insurance company’s lawyers defending the case.

mschuster91
2 replies
19h47m

I vent my frustration to a few agents about the yearly rate increase insanity and they all shrug, give their non-empathetic "I understand" telephone script and blame it on the "system" calculating the prices and make some useless excuse about inflation.

Thing is, they're not wrong. The cost of accident coverage has gone up, actually way beyond inflation - assume you hit a Tesla and it sits around 9 months until Tesla can be arsed to get spare parts, your insurance will be billed for the damage itself as well as a loaner car for the counterparty. And damage repairs themselves have gotten more expensive as well: what used to be a simple bend that your everyday farmer neighbour could fix with the basic tools in his garage all while being drunk out of his mind isn't even possible with modern cars made from aluminium or carbon-fiber composite, not to mention all the tech like distance sensors that go into modern fenders which has to be replaced and carefully recalibrated.

On top of that come all the issues with regular inflation (e.g. labor cost, real estate rental for shops) and the aftereffects of the covid pandemic and its supply chain shocks (there's still a massive number of car carcasses that couldn't be completed and now get priority in parts delivery).

[1] https://www.carscoops.com/2023/11/tesla-owners-stuck-waiting...

Scoundreller
1 replies
19h23m

all the tech like distance sensors that go into modern fenders which has to be replaced and carefully recalibrated

Weren't all those sensors supposed to reduce collisions, your fault or by others'?

bombcar
0 replies
18h46m

Even if they cut collisions by 50% or more, if they more than double the cost of the ones that still happen, it’s a wash.

Still worth it, likely, because saving lives doesn’t really have a dollar amount (cue fight club) - but certainly there.

Old steel bumpered cars would have zero costs at 0-5 mph collision; plastic breaks even at nearly zero. But the newer car safety is much higher.

switch007
1 replies
19h12m

I see lots of people are just parroting insurance PR of “repair costs are up”. I’d love to see the data and see if it justifies the hikes in insurance costs I’d also love to see the average repair cost by part, broken down by whether it’s the insurance company paying or an average Joe privately

Scoundreller
0 replies
18h30m

People choosing to drive more expensive (and physically punishing in the event of a collision) vehicles is some part of it. But insurance companies like that, so they're not about to include that in their PR script.

mint2
1 replies
19h35m

The cost is due to the increasing repair costs to other people vehicles, not mainly your own. You also don’t have to get collision and comprehensive coverage, or at least not with a low deductible. Then you’re really just paying for the damage you cause to others and in that case your vehicle cost doesn’t mean anything at all.

Also, not sure your state or credit score but if you’re not in CA you’ll need good credit to get good rates. The only way to change that is government regulation.

Also if you’re getting the same rates from different places, it sounds like you’re being quoted the same company not different companies. If you aren’t going directly to the actual insurance companies website, that’s what’s happening.

tomrod
0 replies
18h15m

The cost is due to the increasing repair costs to other people vehicles, not mainly your own.

That doesn't sound right to me. That would mean only the liability component is increasing in cost, but aren't the percentages being applied across the board?

gzer0
1 replies
19h11m

Shamelessly greedy auto insurers like Progressive and Travelers are raking in record profits and enjoying sky-high stock prices, with Travelers even surpassing a $100 billion market cap, yet they still have the audacity to gouge policyholders with double-digit rate hikes up to 45%. If payouts truly exceeded premiums during the pandemic as these corporate behemoths claimed, how can they now be pocketing their fattest profits ever after the extreme hikes? The simultaneous jackpot profits and outrageous increases in what people pay expose the insurers' justifications as bald-faced lies. The industry giants are clearly bamboozling regulators and customers simply to boost their already-soaring income and profits at regular folks' expense. Their profiteering tactic: fabricated reasons to hike rates exorbitantly no matter what the economic reality [1].

This needs to stop. We need change.

[1] https://www.wsj.com/finance/insurance-companies-profits-stoc...

tacocataco
0 replies
6h35m

Is there a cheaper insurance company then these two?

Ekaros
1 replies
19h57m

I wonder if they actually have that much margin to give discounts... Or are the prices already at or near lowest possible level... After all outgoings must be lower than incoming in on sufficiently long term. Has something pushed the pay outs too high, compared to what is being paid.

jethro_tell
0 replies
19h35m

I'd expect the cost of cars, which is has become tethered to 'monthly payment' instead of actual cost.

phonon
0 replies
18h2m

Auto insurance pricing is already very heavily regulated, by State. Pricing and underwriting models are public (Search term is SERFF + "State"). The fact is that costs continue to increase for a variety of reasons.

State Farm, for example, lost over $14 Billion last year, mostly from their Auto insurance line. Payments related to losses were 95.2% of the premium they collected, resulting in them having an overall -17% profit margin in that Line.

https://www.carriermanagement.com/news/2024/03/01/259296.htm

nostrademons
0 replies
19h25m

Labor market as well. Many large companies shell out for a salary survey of what other peer companies are paying for similar roles, and then set their wages based on that. That's price fixing. If it were a person calling around to all your competitors and saying "Hey, what are you paying for a senior SWE, we'll pay that too", it'd be illegal.

nerdponx
0 replies
18h7m

This might be a different form of price-fixing.

You know how big-box retail stores will price match products? That's in order to keep tabs on competitors' prices, and to pose a credible threat of starting a price war. Keeping the peace means keeping prices elevated above marginal cost.

Insurance companies rolling out online rate comparison tools has a similar effect.

kelnos
0 replies
18h25m

Insurance is usually regulated and prices (and increases) are set and approved by a governmental body, at least in the US.

That's the more likely reason for similar insurance prices from different providers.

iudusuux
0 replies
20h0m

Not quite right. Auto insurance is a commodity. They don’t have price fixing per the same way housing does. Also they are heavily regulated and their prices probably have to be approved by your state.

fefefeffffeef
0 replies
18h54m

It sounds like you're ignoring quite a few things. First and foremost that car insurance covers a heck of a lot more than the cost of your car. It can also cover

- the cost of the other person's car

- your healthcare

- the other person's healthcare, including passengers in each car

- damage to other property like buildings and equipment that people drive into

- lost wages if you're too injured to work

- and a lot more.

The cost of a crash can be many times higher than the cost of your car. Of course maybe you only have liability insurance, which frankly is not a great idea and I would recommend getting comprehensive coverage if you can.

ensignavenger
0 replies
19h52m

As another anecdote, I get very different quotes for auto insurance from different companies.

dools
0 replies
19h39m

I wouldn’t be surprised if this was caused by concentration in the under writing market. You might find a lot of insurance companies at a thin retail layer on top of a very small wholesale layer.

dclowd9901
0 replies
18h56m

Hate to say it, but 1) if your car is involved in just about any kind of accident, it will be considered completely totaled and 2) most cars will be in some kind of accident.

I think the numbers accurately reflect what insurance companies will expect to pay out for claims. It’s partly due to the nature of vehicle design now and partly due to the cost of repair.

CydeWeys
0 replies
18h24m

I haven't had auto insurance in nearly ten years (because I don't own a car myself), and I gotta say, this is increasingly saving me more and more money over time. Everything about cars in the US is just getting so expensive (including the cars themselves); I wonder when it will start collapsing?

standardUser
57 replies
20h5m

Rent is up nearly 20% since 2020, with the largest increases concentrated on lower- and middle-tier apartments rented by lower-income consumers. About half of renters now pay more than 30% of their income in rent and utilities, and rising shelter costs were responsible for over two-thirds of January inflation.

We need better rent stabilization laws. Not the ones we have in many big cities that result in perpetually skewed markets and $200/mo rents. But a more comprehensive approach including requiring multi-year lease options, 12-month or greater rent increase notice requirements, and rent increase caps that prevent catastrophic rent hikes but still allow units to align with market rates over longer timeframes.

Unfortunately, people prefer to strawman the entire concept by pretending that the only "rent control" laws that can exist are like those in NY or SF.

Workaccount2
18 replies
19h45m

The only fix for high housing costs is to build more housing or make your area shitty (so people want to leave). The latter isn't popular so that leaves only one option.

You cannot legislate away costs for an in demand product. It can't be done. Put strict rent increase laws in place and all you do is make it so people sit in their apartment for years to lock in that low rent.

janalsncm
5 replies
18h52m

There is a third way. You can reduce demand in other ways, like steep taxes on second and third homes. This releases pressure on the rental market by enabling some renters to afford to buy rather than rent.

Aurornis
4 replies
18h47m

You can reduce demand in other ways, like steep taxes on second and third homes.

The properties people purchase as second and third homes aren't going to make a difference to the people struggling to afford 1 bedroom apartments.

Focusing on second and third homes is just a way to punish people wealthy enough to afford multiple homes. While punitive taxes against other classes are attractive to certain parts of the voter base, it doesn't actually improve the situation for people looking for cheap apartments at all.

mbgerring
1 replies
18h15m

Have you looked at what’s happening to housing prices in resort towns lately?

JackMorgan
0 replies
14h27m

No what is happening to them?

janalsncm
0 replies
16h28m

The properties people purchase as second and third homes aren't going to make a difference to the people struggling to afford 1 bedroom apartments.

They will. As fewer homes are allocated to current homeowners, they will be instead available to renters. With fewer renters on the market, the cost of renting will decrease.

InitialBP
0 replies
15h35m

I don't think this is entirely true. If people who are currently renting move into homes then their apartments will be rented to people who are looking for housing.

It seems like if you add supply to one area of the housing market like the one above, there is a group of people ready to take advantage of that supply. 3bdroom apartment renters buy a home, then 2bdroom apartment renters get a bigger place that's affordable and meets their needs.

Assuming this works exactly like intended, that 1 family with two or three houses now only owns one and 2 other families get a house, then you're freeing up supply across the whole range of properties.

standardUser
4 replies
19h36m

Did you read my comment? It is literally about how "strict rent increase laws" are not the solution.

arcticbull
2 replies
19h28m

While true, if supply and demand are allowed to meet through new construction you won't need rent stabilization laws.

kredd
0 replies
19h0m

I understand the general economics behind it, but I don’t think you can free market the problem away when the market is very obviously not free. Just off the top of my head - incentives for over complicating the zoning laws in big cities, extreme push from the locals to stop the new constructions, owners not wanting their investments to go down.

I live in a rental building in Vancouver, and without rent control it would be awful for everyone, as the demand has been insane in the past decade. Sure, for people like us who can pay 2x the rent wouldn’t exactly be a problem, but I have friends, and a lot of elderly in my neighbourhood who would have to move out right away. I can’t imagine a possible way for supply to catch up with the actual demand just because how the municipal governments function. And well, construction business isn’t known to be efficient here in North America.

CPLX
0 replies
19h22m

Nope. Supply and demand will never be smooth and linear, housing markets will always be intrinsically inelastic. Ever tried moving?

Since that’s true you can use policy to decide who gets to keep the inevitable consumer surplus.

Aurornis
0 replies
18h49m

Your component proposed a set of rent controls (12 month notices, limited yearly raises) that are basically equivalent to rent control in many locations.

wolverine876
0 replies
17h55m

You cannot legislate away costs for an in demand product. It can't be done.

It's done, and in many places around the world. In NY and SF; in Vienna, the government owns a large proportion of the housing and keeps it affordable (iirc).

vkou
0 replies
19h8m

I mean, it does accomplish the goal of prioritizing the welfare of existing residents over the welfare of future residents and non-residents.

Most societies do that sort of thing on the regular, but people pushing back against rent control rarely want open borders and welfare for non-citizens.

stefan_
0 replies
17h28m

Well, if the supply is going to be limited forever the way it's looking, the least we can do is make it cheap and stop any more economic activity going exclusively to ultimately unproductive rent seekers. It's option three to your "make the area shitty".

scotty79
0 replies
18h52m

The only fix for high housing costs is to build more housing

That won't fix anything. People with capital compete with people who have housing needs for the available houses. Increasing number of houses doesn't change this dynamics.

The people in need of housing will get priced out of available houses eventually.

What should be done is taxing housing heavily and progressively so that houses become a shitty asset that costs you more the more you have of it.

People with capital will drop it like hot potato and finally people who just want to live will be able to afford it again.

r00fus
0 replies
19h20m

The problem is speculation by foreign money or wealthy people.

This is fixable by taxation or by limiting corporate ownership of homes.

moreofthis
0 replies
18h58m

Put strict rent increase laws in place and all you do is make it so people sit in their apartment for years to _live their lives in their homes_.

Not that I disagree with building more housing, or being more creative with rent control, but the fact that people in rent conrolled areas can afford to stay in one location isn't a bug. There may be other bugs, but that ain't one.

CPLX
0 replies
19h24m

Of course you can legislate costs from one person to another. You can redistribute the profits from landlords to tenants.

It will have consequences. Some of those consequences might be negative.

But some won’t. It’s a policy choice, economists aren’t priests.

Ekaros
11 replies
19h55m

12 months or more to increase rent seems counter-productive. As it would mean that what makes most sense for landlord is to just increase by maximum each and every time as they cannot forecast changes over such long period.

Still, capping increases to something like inflation+2%, and making leases continuous with long termination periods would be entirely sensible fixes.

lelandbatey
5 replies
19h46m

If inflation+2% is an acceptable rent change, I don't understand how needing 12 months or more to increase rent is a problem. The only thing a shorter time period allows is a landlord to say "well, over this past 3 months we saw inflation change by +-0% but 0+2 is still 2%, so we're increase rent 2% in the next 3 months period".

And that doesn't seem like a good possibility.

Ekaros
4 replies
19h41m

12 months seems rather extreme range to me. So what would happen is that you rent a place, day after you move in you get notice that yes we are going to increase rent by maximum in a year. After all this is the most logical and effective time to do it. Now cost might not increase as much in year from that date, but landlord does not know. Come next year, they again also don't know, so again max allowed at time.

But instead, if you can notice rent increase let's say 1 month before year is full, they might look at what are current cost and think oh, I could do with lower increase.

standardUser
3 replies
19h38m

One option is to require multi-year lease options. Most commercial leases work that way. That creates a lot of stability and predictability for the family, just as it does for businesses.

bombcar
1 replies
18h39m

Commercial leases are also likely to be triple net and other things; if you want a multi-year residential lease you can get it but will pay a premium.

standardUser
0 replies
17h37m

Yes, give families the choice. Some will choose a lower price with less stability (like me, a single dude). Others will choose a higher price for long-term stability (such as a family of 5).

Ekaros
0 replies
19h33m

My basis is continuous contract with let's say 3 or 6 month clause of termination under limited reasons. Like purchase or taking unit to use by family. Or something like large renovation...

justinclift
1 replies
19h38m

Why "inflation+2%" rather than just inflation?

Ekaros
0 replies
19h34m

To allow some leeway for increase in property value and demand, in general lot of money looks that level of returns. Also inflation does not always full reflect the costs.

Also something like 2% above inflation does not lead to unreasonable increases. Until market rates are reached.

vkou
0 replies
19h5m

Giving multi-month notice that rent is going up means that the tenant has X months to shop around.

If the increase is too high, the tenant can push back by moving, or negotiating.

This only works, of course, if you actually have a supply of vacant housing. If there's a housing shortage, no amount of notice is going to fix the rental situation.

standardUser
0 replies
19h39m

I think families should have as much time as possible to handle the significant costs and disruptions associated with moving homes.

gopher_space
0 replies
19h25m

As a landlord, if you want to forecast over long periods you don't raise rent. Everything else is rolling the dice. Someone who increases rent by the maximum each time owns multiple units they can afford to leave vacant for indeterminate periods, and is gambling with their money.

58028641
11 replies
19h58m

Doesn't rent control just reward people lucky enough to rent before prices increased? Wouldn't increasing supply be a better way to reduce prices?

seanmcdirmid
6 replies
19h50m

Ya, most rent control just rewards those that are there when it happens, if it applies to new renters, supply eventually seizes up.

I’m not sure what model parent thinks will work. Maybe rent control light where price increases are limited but the limit is highish? I can see that working out, limiting increases to 1.5-2X inflation might keep the market fluid and provide some stability to renters without locking new tenants out.

thisgoesnowhere
2 replies
18h58m

Would you apply the same logic to how the market for real estate unfairly rewards previous entrants?

My parents have seen a 4x increase in the value of their house in 20 years, is that unfair?

seanmcdirmid
1 replies
17h39m

Yes! Buying your own home is the ultimate form of rent control, even though property taxes increase over time (and its even worse in CA with prop 13). Very unfair.

If we wanted to make the market fair, we would disallow home owners all together. This effectively happens for most people in some places in Europe. Also, I heard of some places in Europe where if you own your own home, you have to pay some extra tax vs. what you would have paid in rent. I think Switzerland? They also had some form of rent price control, although this just made it really hard to rent an apartment even if you were willing to pay more. These are fairly complex systems that all give advantages to existing residents (so moving to Europe for two years to do a post doc is much harder than it would be if you did that in the USA).

thisgoesnowhere
0 replies
17h32m

Finally someone who has thought through the problem and come out with the right solution. Great stuff

malermeister
2 replies
19h24m

The secret is for the government to make up for the decrease in private supply. Vienna showed how it's done - see this article for example: https://citymonitor.ai/environment/housing/red-vienna-how-au... There's a reason it's been #1 most livable city in the world on several rankings for years in a row now.

seanmcdirmid
1 replies
17h37m

You need to have some residency control for that to work. Otherwise, everyone would just flock to the most popular cities for their discounted apartment. This also works in Singapore, but only for qualified residents.

malermeister
0 replies
10h43m

What residency control does Vienna have?

bombcar
0 replies
18h42m

So we coordinate- every single city increases supply at the exact same time, causing all local prices to go up whilst the average goes down.

vkou
0 replies
19h7m

Yes in the same way that social welfare rewards people lucky enough to be born in your country.

standardUser
0 replies
19h40m

"Rent control" can do any numbers of thing - it really depends on the specific policies.

patrickmay
3 replies
19h38m

Rent control has been repeatedly demonstrated to increase prices and lower the quality of the units under control. The solution to high housing prices is reducing zoning restrictions, not increasing government intervention.

robocat
1 replies
18h53m

The solution

You can always look at countries/cities where your "solution" has been tried and see if rents shifted.

Certainly in my city there are many more houses (infill and suburbs) and rents are not dropping - however we also have high immigration so demand is rising.

Then again, popular cities have huge demand. Increasing supply seems unlikely to fix the underlying issue.

patrickmay
0 replies
18h40m

Rent control fails consistently. Here are a couple of links, any economist who follows the data agrees: https://www.urban.org/research/publication/place-blame-where... https://www.nmhc.org/research-insight/research-report/nmhc-r...

Increasing supply seems unlikely to fix the underlying issue.

The underlying issue is that the law of supply and demand applies to housing just as to any other market. Increasing the supply is the only way to lower prices.

mjevans
0 replies
16h49m

The solution is More Houses. Build more houses. Keep building.

It would help long term if houses were required to be built well.

It would also help if there were incentives to build more housing when the market was notably dysfunctional; as it has been for the past 40+ years.

devbent
2 replies
18h48m

As a land lord, every year the cost of my owning my rental property goes up by about $300 / month due to HOA increases and property tax increases.

That is roughly a 10% increase, way above inflation. Any sort of rent control would have the rent less than the cost of ownership in 2 or 3 years.

bombcar
0 replies
18h44m

Renting a HOA’d unit has to be its own hell.

Marsymars
0 replies
17h43m

It trivially can't do that forever though, or the entirety of the world's economy will consist of fees to your HOA.

NovemberWhiskey
1 replies
19h43m

Everything is up 20% since 2020; but lower-income wages are up more, FWIW.

pizzafeelsright
0 replies
19h21m

My experience would say goods are up about 50%

I keep having to bump my wife's allowance while not getting bacon because it isn't in her budget.

Aurornis
1 replies
19h8m

But a more comprehensive approach including requiring multi-year lease options, 12-month or greater rent increase notice requirements, and rent increase caps that prevent catastrophic rent hikes but still allow units to align with market rates over longer timeframes.

If you require landlords to give 12 months notice of rent increase and cap the year-over-year increase, the outcome is entirely predictable:

Every 12 months, tenants will receive a notice of pending rent increase, and that rent increase will be the maximum allowed by law.

This game has already been tried before. Once you start tying people's hands, the optimal strategy is to become as aggressive with rent increases as the law will allow. The only time you back off is if you have a vacancy you can't fill, but that's unlikely because once a city starts controlling rents heavily (even with your proposed laws) it discourages more construction.

There's basically no difference between strict rent control and a rent control that limits rent increases to X% per year with 12-month notice period. They're the same thing because once you cap something, people feel compelled to chase the cap for fear of getting left behind.

Marsymars
0 replies
17h40m

Every 12 months, tenants will receive a notice of pending rent increase, and that rent increase will be the maximum allowed by law.

I'd suggest having no maximum increase, and having the landlord be liable for moving costs if the tenant chooses to move and the landlord is not able to re-rent the unit within a short time period at the increased rent price.

jonas21
0 replies
19h13m

Many landlords are happy to offer longer-term leases. I signed a two-year lease once, and I think they would have offered a longer one if I'd asked.

I'd guess there's not a lot of demand for these as renters also want the flexibility to move.

akira2501
0 replies
19h19m

So, instead of an algorithm that purely benefits landlords, you just want the opposite algorithm that purely benefits tenets?

In either case we're throwing the whole pricing part of the market away while still pretending we're engaged in capitalism. Unless you dedicate huge amount of resources to the problem you will likely harm more people than you help.

You could compete with the market through publicly owned housing that people of low income can apply for.

You could upset the market by vastly overhauling zoning laws to make them more open and less bureaucratic.

You could increase access to the market by introducing property tax brackets that are based on total property ownership in a county.

You could increase access to housing options by drastically improving high speed transport to new areas that are currently underdeveloped.

If people are being priced out of the market it's because not enough options exist, which in NYC and SFO is a real physical issue, but in most other places it seems like an entirely artificial issue.

Marsymars
0 replies
17h44m

I'm staunchly against "rent control" in the form of capped pricing, and feel like I've been shouting into the wind for years describing rent stabilization measures like you're describing. It seems like something that nobody is discussing or has any interest in.

There are costs to both moving and to a lack of home stability that are ultimately born by society at large, but that are effectively negative externalities to the actions of landlords.

miiiiiike
52 replies
19h20m

I lived in a building that was owned by a hedge fund and used algorithmic pricing. It was frustrating to know the vacancy rate in the building, how desperate the sales people were for residents, and still be told that rent was going up hundreds of dollars a month because of demand in the region.

Another thing they did was to offer lower rent if you moved into a unit that was vacant. They ”incentivized” people to move every year instead of just increasing the rent a reasonable amount. I’m talking rent going up $500-$1,000/month unless you moved into the identical unit next door. Most of the people in the build paid the increases but we were young so we moved.

Our first year we lived in a small 1br. When the lease came up they wanted to increase our rent by $600/month. We opted to move into a huge 2br with limited light that had been vacant for a year or two. When our lease on that one came up they wanted to more than double our rent because there was such high demand for the unit.

We were the demand.

scotty79
34 replies
18h55m

I don't know how regulators can look at this number of vacancies and conclude that yes, the taxation on property with vaccancies is as high as it should be.

screenobobeano
17 replies
18h17m

I am really a proponent of the Chinese system. I’m a real estate investor and this “free market” isn’t going to last much longer since owning vacant homes will net you more than virtually anything else you could do legally. Real Estate is a free money machine, and it won’t stop until we adopt realistic government controlled system.

oatmeal1
6 replies
15h35m

Real Estate is a free money machine, and it won’t stop until we adopt realistic government controlled system.

Real Estate will stop being a free money machine when the government stops artificially restricting housing supply with single-use, single-family zoning.

rocqua
2 replies
11h29m

It won't. Zoning is stupid and harmful in the US. But real-estate will always be rising in value. There is no way to make more land. And land you do nothing to gains value from others around you improving their own land.

A land value tax that ignores the value of improvements on the land would make a dent. Freeloaders who buy a lot just to sell it later would see their gains evaporate. So land holders would seek to actually improve their land.

oatmeal1
0 replies
26m

Real-estate does not increase in value in Japan. Land might increase in value, but the developments depreciate. Agree that land value tax is much better than property tax.

bluGill
0 replies
10h57m

Land generaly should increase in value with Inflation. There is a lot of land to develop if zoning doesn't get in the way-

__loam
2 replies
12h38m

I agree that we should relax residential zoning laws but it does feel pretty naive to think the free market alone will solve this. I doubt everyone being adequately housed is even the optimal state of the free market.

Geisterde
1 replies
5h51m

Its not a free market, we are closer to communist than we are free markets.

__loam
0 replies
2h7m

Communist would be building concrete prefabs until we could house everyone. That's one of the few things the Soviets did right.

carom
6 replies
17h19m

What is the Chinese system?

trimethylpurine
5 replies
16h26m

The Chinese system restricts foreign nation state actors from buying everything so they will not be able to do what China is doing to the US. The US has only just started writing policies to address that (for example: [1]), probably because for so many decades Americans wanted to believe that China was an ally, or at least a well meaning business partner. China proves that capitalism doesn't work by destroying it.

[1] https://www.faegredrinker.com/en/insights/publications/2024/...

xbmcuser
3 replies
15h40m

China is not doing anything to the US, western countries were willing to hide the black money of countries before as it helped their economies. As China and other countries got richer the amount of money those people started bringing and putting into the real estate of western cities in the world exploded. The property market crash of 2008 and low interest rates made the situation worse. Now people in the west are crying about property prices but if they stopped allowing in black money from countries they would not face the problem they do. If they can find out about terror financing etc then they for sure can find all the corruption and black money coming into their countries/cities.

pyr0hu
1 replies
7h53m

China is doing the same in the EU. In european capitals, they are buying up the properties, increasing the rents and pushing out young couples from renting flats for a reasonable price. There are districts in Budapest where all flats are owned by chinese people. How does it help the EU economies, if they are leasing without contract, without tax, without anything illegally? They came every month, you pay in cash, no trace (but this applies to 99% of hungary renting, so it's the issue with the current rental system), they aren't even injecting money into the economy this way. And it's getting ridiculous that 26-28 year old people cannot rent a flat by themselves and have to resort to renting a single room only for 30-40% of their salaries.

xbmcuser
0 replies
1h9m

It's not china ie chinese government doing it but rather Chinese people purchasing residential properties. Chinese government is interested more in stuff like ports, airports/infrastructure. In actual fact China would prefer the money it's population is spending abroad is spent at home specially since the COVID slow down has slowed it's economic growth. So china restricts money going out of its borders now western countries could help China block it but that would be helpful to Chinese communist government so they don't and that is resulting in their own citizens getting priced out of their own cities.

trimethylpurine
0 replies
13h49m

>China is not doing anything to the US

In many cases the ownership has been traced to government funding. The suspicion is that these are just the tip of the iceberg.

So, at least in the eyes of the US Congress, based on some damning evidence, China is doing something to the US.

That said, "black money" is also a problem. But I suspect that's the case in China as well. There's no way to eliminate all corruption, even in China.

Y_Y
0 replies
5h5m

What on earth is a "foreign nation state actor"? Do you mean "country"?

kaashif
0 replies
15h33m

it won’t stop until we adopt realistic government controlled system.

Are you aware that the government is the entity preventing housing from being built in many cities?

I don't think zoning should be abolished or anything but clearly the regulations the US has now, at least, are incorrect and restrict supply far too much.

Georgelemental
0 replies
15h45m

Didn't the Chinese real estate market collapse recently, with several major bankruptcies?

AuryGlenz
0 replies
16h36m

Real estate will continue to be a good investment as long as demand outstrips supply.

importantbrian
8 replies
15h10m

Obligatory Georgism callout, but a high land value tax would solve this issue. Landlords would be forced to put the property to productive use, and it discourages the kind of speculative land holding that these companies are engaging in.

leereeves
7 replies
14h19m

But that tax would be passed on to renters, increasing rent for everyone.

Unless you're talking about a tax on vacant properties.

antonok
4 replies
12h56m

It wouldn't get passed on. Without land value tax, holding real estate is a good enough investment on its own that rent prices can be left artificially inflated. LVT puts pressure on landlords to actually earn back the value of the property to avoid losing money. In practice, that means offering competitive pricing.

This is a solid in-depth explanation, if you're interested: https://www.gameofrent.com/content/can-lvt-be-passed-on-to-t...

leereeves
3 replies
12h2m

But all landlords would pay the tax, and none of them would want to lower prices below their own costs.

If it becomes impossible to rent properties profitably, then eventually there would just be fewer rentals available.

djokkataja
1 replies
10h48m

But all landlords would pay the tax, and none of them would want to lower prices below their own costs.

This is true ...

If it becomes impossible to rent properties profitably, then eventually there would just be fewer rentals available.

But this is a leap that doesn't apply to the Georgist scheme. A key feature of the scheme is that taxes on buildings (possibly among other taxes) are removed in favor of the land value tax. It's true that if the tax on some piece of land increases sufficiently, it will eventually become impossible to profitably charge rents on existing buildings on that land--but improving existing buildings or building some superior building (for example, a new building with more units than a pre-existing building) allows landlords to continue profiting.

If the current landlords don't want to improve buildings there, they can sell the land to someone who will. And it's clear that someone will, because if there's enough demand for the land that the land value tax makes it unprofitable to sit on it without improving it, someone is going to want to do something more with it.

The reason we don't already have a Georgist-style economy is quite obvious, of course: the homo sapiens landlordicus is a very soft, squishy, vulnerable subspecies. If they had incentives to improve their properties and thereby possibly even work as hard as the rest of the human species, they might well go extinct. And no one wants that.

leereeves
0 replies
6h28m

That would require removing the zoning restrictions that prevent the construction of new housing.

But here's the rub: if you remove those restrictions, you don't need to change the taxes. Even with current taxes, people will build more housing units, if they're allowed to and they can make money from it.

scotty79
0 replies
10h0m

If it becomes impossible to rent properties profitably, then eventually there would just be fewer rentals available.

That's the point. They'd be forced to sell instead of hoarding increasing supply of houses on the market tremendously.

You wouldn't rent. You'd just buy.

importantbrian
0 replies
12h53m

Land value tax can't be passed on to tenants. Whether or not a tax can be passed on depends on the elasticity of supply. The supply of land is fixed, so land value taxes reduce the price of land, and generally also reduce the price of rent as a result.

db48x
0 replies
14h9m

Yes, but adopting Georgism would mean eliminating income taxes as well. In principle most people should end up paying less in taxes (because they don’t live in a densely–populated area, or because they live in a dense area but are in an apartment instead of a house on a whole acre), while the overall tax revenue stays the same.

pas
2 replies
15h51m

what vacancy numbers are we talking about exactly? and how high are they, and how did they change over time?

vineyardmike
1 replies
14h57m

Not OP but I had a similar experience.

I lived in floor 30 of a “luxury” skyscraper in Seattle built after ~2015. We had an algorithm for pricing according to the landlord and the class action letter we received. Amazing water views and city views. Clearly desirable housing in a city flush with rich people and a massive housing shortage. I was the only occupant on the floor and the only tenant at the time ever to live in that unit. They tried to raise my rent like $1000/m when lease was up. We paid it since we had just gotten a raise. Next lease renewal was about $1000 again and we moved out because $2k extra was just too far above comparable units nearby. They literally offered us a Starbucks gift card to stay. We could see the other vacant units listed on the buildings website and they were always priced way above comparable units in neighboring buildings.

Oh and to directly answer your question, I’m guessing the building was never more than half full. The mail room was never full, and the parking garage had about 20/100 spots in use.

pas
0 replies
3h42m

Thanks for the details! I'm asking because the overall rate is historically super low, and that kind of behavior from the landlords seems ... bananas - to use the terminus technicus. (But of course, maybe during ZIRP it was not a problem to try to experiment with various crazy - and inhumane - pricing schemes.)

https://fred.stlouisfed.org/series/RHVRUSQ156N

https://fred.stlouisfed.org/series/EVACANTUSQ176N (estimated absolute number)

https://fred.stlouisfed.org/series/EOFFMARUSQ176N (held off the market)

lotsofpulp
1 replies
18h48m

Should be a formula that keeps increasing the tax liability per empty month, so eventually the owner has to dump it for zero or give it back to the government.

bluGill
0 replies
10h50m

You want a number of empty units in your city so that if you want to move there is a place to move to. No empty units means someone does without. You don't want too many empty units of course. some is needed.

this price fixing is partially about units not even for rent which is a different problem you don't want. (but you want some units not for rent while they remodel)

pitaj
0 replies
14h38m

Higher vacancy rates are associated with lower rents and lower house prices. Vacancies are at the lowest rate in years in high demand areas.

ikiris
0 replies
9h21m

Because a large percentage of them have a fundamental belief that any taxation is theft.

sheepybloke
8 replies
16h10m

This is literally what I'm facing right now. We were hoping to stay in our place for one more year, but the company is raising our rent by 10% while at the same time are running a special for a free month's rent. Every place I've rent from has done this, raising rent at least 5% to 10%. I just want one place where I can stay and try to save up money for a house.

ikekkdcjkfke
6 replies
12h3m

Do like the EU, group up and collective bargain. Strike, lock-out etc. are all concepts explored over hundred years ago

rocqua
5 replies
11h35m

I hope it would work, but fear evictions and police intervention would be brutal enough to quash the will to fight.

madsbuch
4 replies
7h40m

EU citizens love this attitude from Americans as they invest in REITs while sitting in their cheaper apartments. The EU states love it as they got to tax that income from US REITs.

In Denmark we have "Bopælspligt" meaning that an owner of an apartment is obligated to have someone living in the apartment. While i know this is detrimental to the US mentality is forces a free market on real estate and is, IMHO, the only way you can ensure a fair rental market without rent control.

As a result real estate in Copenhagen is cheap enough that most working people in Denmark are able to buy (albeit that being a small apartment).

mrtksn
3 replies
6h13m

In Denmark we have "Bopælspligt" meaning that an owner of an apartment is obligated to have someone living in the apartment.

What happens if no one is living? Can't find a tenant or simply takes a really long holiday or goes abroad to to work for a few years?

I'm under impression that Americans freak out because they tend to go full technical on laws, that is, they don't care much what the governments are trying to achieve with the laws but work within the limits of strict technicality. So a lot of Americans were freaking out here on HN when GDPR was introduced, some shutting down personal projects because were afraid to get in trouble with the EU laws and find themselves in huge and expensive lawsuits.

shortsunblack
1 replies
4h57m

The GDPR comment perhaps is indicative of this out of all. GDPR enforcement has been small, ineffective and nowhere close to "every kind of violation gets an expensive lawsuit attached". It's as if this is meta-commentary.

mrtksn
0 replies
2h44m

I don't know why there needs to be "iron fist nazi approach, hanging people for the smallest violation" kind of enforcement of the GDPR to be effective. Europeans are not that much into laws and enforcement of it, there's always some level of disorder and lawlessness and the police wouldn't start shooting immediately. Things tend to be corrected after some scandal or if the issue grows to be actually impactful.

GDPR essentially makes companies mindful about how they store and transfer data and if something goes wrong, it is useful to tell what went wrong and who is responsible about it. There's no EU police going around and nocking on the doors, taking people in for the smallest violation.

madsbuch
0 replies
6h5m

if you go abroad you most definitely rent out your owned apartment as you otherwise are fully tax liable in Denmark with a permanent dwelling.

if you are on a long holiday, you still legally live in the unit.

if you cannot rent it out you, well, lower the rent until you can. easy as that. or you put the unit up for sale, which suspends the rule.

kurthr
0 replies
13h48m

If both of you aren't on the lease, alternate between the two of you. At least you won't have to move very far.

When I was just out of school I did this in a large complex with my wife more than once (we had different last names and used her parents address for mail).

The first time, we didn't even have to move, because she got the pick of open apartments... one of which was ours. We worried they would want to paint it, but I guess since I'd only had a it a year, they didn't bother. The Sales person was happy because they got commission anyway, and we got a free months rent rather than paying an extra month's rent in increases.

ClumsyPilot
2 replies
17h1m

how desperate the sales people were for residents, and still be told that rent was going up hundreds of dollars a month because of demand in the region

This literally sounds fraudulent

I have a hypothesis, that the reason for many ailments in Western economies is that in the past 20-30 years we have created a lot of parasitic, highly-sophisticated economic fraud, and regulators have not caught up to it yet.

passwordoops
0 replies
7h19m

Not that sophisticated. The tech industry in particular celebrates rentierism and middle men while calling it a "service".

Any other way to describe darlings like Uber, AirBNB, what Amazon became, many SaaS (looking at you MSFT Office) is simply disingenuous

harvey9
0 replies
7h57m

Many legislators are also residential landlords. Do not expect those regulators to be catching up any time soon.

xnx
1 replies
3h5m

It was frustrating to know the vacancy rate in the building,

Isn't the ideal vacancy rate always one unit? Any more than 1 unit and you could be collecting more money. Any less than 1 unit and you may be underpricing.

Tolaire
0 replies
2h32m

Not if landlords are colluding to drive rents up.

HDThoreaun
1 replies
1h43m

Jacking up the price on renewal is the first move any landlord who is looking to maximize profits will do because most people really dislike moving. Plenty of people will accept the rent increase instead of the hassle of moving, allowing you to charge above market rates..

benhurmarcel
0 replies
29m

I’m surprised this is legal in the US.

In a lot of European countries, the landlord cannot raise the rent as he wants, there’s a maximum per year (usually a bit lower than official inflation).

taylorhou
0 replies
5h20m

Unfortunately this is because they know there's a massive cost to moving and the operators are pushing the rent as much as they can for "convenience"... Regardless of external demand.

josh-sematic
19 replies
20h15m

IIUC it’s still valid to use an algorithm to recommend prices, but you’re not allowed to make an agreement with a competitor that you will both use the same alg? Or is this saying that any algorithm which takes competitor prices into account is out-of-bounds?

spamizbad
9 replies
20h8m

The former (you can’t collude with a competitor to use the same algorithm to set prices)

lazide
8 replies
18h6m

How can you collude with someone you don’t communicate with in any way?

dkjaudyeqooe
4 replies
18h0m

By using a third party software or service that sets a price, knowing that your competitors are doing the same.

SoftTalker
3 replies
17h40m

Is it collusion to go to a rental search site and survey the asking rents, then asking similar for your property, knowing that your competitors are (probably) doing the same?

Is it collusion when a gas station manager drives around the neighborhood, looks at the competitors posted price for gas, and sets his prices the same?

makeitdouble
0 replies
17h5m

IANAL but it probably would it you did it whatever the circumstances.

If you were the cheapest gas station in the neighborhood with prices appropriate to your operation but one day decide to align your price to your competitors and keep adjusting your price to whatever they set while nothing changed for you, that feels like the very definition of price fixing.

dugite-code
0 replies
17h12m

I think the argument in this case is the algorithm is effectively acting as a single agent that will always come to a fixed price and is actively recommending having vacancies to prevent competition.

Where as if individuals are assessing the prices they are in a sort of prisoners dilemma, if they leave a property vacant someone may lower the average price meaning they can't recoup the lost earnings when it is occupied. So their best bet is to keep a property occupied as much as possible.

dkjaudyeqooe
0 replies
17h24m

Neither of those examples are what I described and are perfectly fine.

You have to use a third party that is setting a price and stick to that, knowing others are doing the same. You're describing individuals determining their own price using their own judgement.

lodovic
0 replies
7h7m

Everyone is colluding with the middle man

fragmede
0 replies
15h18m

"in any way" is doing a lot of work there though. The way they're using a 3rd party algorithm is effectively communication and the FTC isn't standing for it.

dragonwriter
0 replies
13h49m

Communicating with a common intermediary is, or at least can be, indirect communication.

This was, e.g., the case in the major ebook price fixing case where Apple was the common intermediary between the publishers.

advisedwang
5 replies
19h52m

The law doesn't work on hard and fast rules like that. It's more like "If the effect is that you are working together to set prices, that's illegal", regardless of whether you use algorithm A or B, regardless of whether you share prices in advance or watch how other companies set prices, regardless of any details of the mechanism.

If you use the same algorithm it's not necessarily illegal, but it will be if it results in price fixing. If you take into account competitors prices its not necessarily illegal, but it will be if it results in price fixing.

lazide
4 replies
18h6m

What is the definition of price fixing in this world?

makeitdouble
0 replies
17h12m

Reducing consumer choice by artificially setting sinilar prices as comptitors.

dragonwriter
0 replies
13h54m

Its worth noting in US federal law, there isn't a distinct statutory prohibition or definition of price fixing. “Price fixing” is a description of one general pattern of violation of a very broad statutory language in the Sherman Act (15 USC § 1) prohibiting “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations”.

State competition laws may have separate rules for price fixing and other specific kinds of behavior or have similarly broad language to the Sherman Act.

StewardMcOy
0 replies
16h14m

We can start with what is definitely price fixing and work our way up to why algorithmic pricing is price fixing.

To keep things simple, let's say a city has two landlords, Alice and Bob, who each own around half of the residential rental properties in the city.

Textbook definition of price fixing is if Bob and Alice agree to never rent for less than $5 per square foot.

Next scenario: Instead of a minimum price, let's say that Bob and Alice agree a formula on how to price their properties based on vacancies. The formula can be as simple or as complicated as you like. But in this scenario, if the formula never gives them a result less than $5/square foot, it has the exact same outcome as the textbook scenario. And since there is direct coordination between Bob and Alice, this is definitely price fixing. In fact, it's even worse than the textbook scenario, because now they're coordinating on exact prices, and not just a minimum.

Forgetting formulas for a minute, let's say Charlie, who is unrelated to Alice and Bob, approached them separately and offered to sell them information on how to set their prices. In this case, there's no algorithm involved. They each pay Charlie a small fee per month, and he tells them not to rent for less than $5 per square foot. There's no direct communication between Bob and Alice, but because they both know that the other is acting on the same advice from Charlie, the result is the same as the textbook scenario. You could even argue that there is indirect communication between them, and that Charlie is running some kind of price laundering service.

Finally, you can combine the two. Bob and Alice both tell Charlie how many vacancies, delinquent payments, etc. they have. Charlie feeds all the data into his computer, which contains a really complicated formula, and that computer tells them how much to charge. And wouldn't you know it, that formula never produces a result less than $5/square foot. Again, because Bob and Alice know that the other is using this service, and because they have an exact price, rather than a minimum, they know they don't have to negotiate with potential customers. The other landlord won't give that customer a better deal.

ClumsyPilot
0 replies
16h57m

Taking competition our from the market mechanism

rocqua
0 replies
11h13m

A situation where you could offload pricefixing to the algorithm is bad. Any algorithms that can't do the price fixing for you are fine.

bobthepanda
0 replies
20h6m

There were antitrust suits filed against RealPage after a ProPublica piece

In one news release, Realpage offered its property management clients the ability to outsource daily rent-setting and revenue oversight. “We believe in overseeing properties as though we own them ourselves,” the company said in a presentation that plaintiffs’ lawyers referenced in the lawsuit.

The lawsuit quoted one unnamed witness, a RealPage pricing advisor, saying that some pricing advisors told property management employees that they had to follow the software’s recommendations. A leasing manager at a RealPage client said, “I knew [RealPage’s prices] were way too high, but [RealPage] barely budged” when the manager asked to deviate from the suggested rent.

An update to the software tracked not only clients’ acceptance rate, but also the identity of the landlords’ staff members who had requested a deviation from RealPage’s price, the lawsuit said. Compensation for some property management personnel was even tied to compliance with the company’s recommendations, it said.

So if this is true, this also means that managers are being compelled to adopt the recommendations more than as mere suggestions.

https://www.propublica.org/article/doj-backs-tenants-price-f...

__s
0 replies
20h3m

Reading linked doc, sounds like first

But yeah, your latter case sounds easy to fall into gray territory, since it seems illegal to agree on prices even if intermediary makes it unclear with whom exactly you're agreeing with

foooorsyth
10 replies
19h47m

As a non-landlord, it seems quite odd that landlords and property managers can’t “collude” on rent pricing.

If I were to have a rental property and a management company for it to be hands off, I’d probably want to defer rent setting to the people that understand that local rental market. Both parties have aligned incentives - they want to maximize rent. I guess the government just wants the low-information party to set the pricing? Are there any near-monopoly property management companies in any major metro in the US? Seems like they’re a dime a dozen with lots of competition — doesn’t seems very anti-trust-worthy to me, but what do I know?

apendleton
6 replies
19h31m

Yes, the companies targeted here aren't property managers themselves, they sell software to property managers, and have ended up providing services to many ostensibly-competing managers and building owners in some metro areas, who collectively control enough of the rental market in those areas that they can "maximize rent" by moving the whole market up in concert rather than having any of the owners actually compete with one another.

From a ProPublica piece [1] about it, for example:

In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage.

[1] https://www.propublica.org/article/yieldstar-rent-increase-r...

Rapzid
5 replies
19h10m

Ahh, this is the missing context!

The collusion is the agreement to adhere to the pricing set by a central pricing authority, not basing your prices off shared information or recommendations. This makes a lot of sense now.

Edit: Well maybe it wasn't missing, but I missed it in any case. Cheers.

lazide
4 replies
18h4m

But why wouldn’t they just got a couple percent under the price, and fill all their units?

Vacancies kill returns.

dugite-code
0 replies
17h7m

Vacancies kill returns.

Unless you can guarantee prices will rise, then you just recoup lost revenue when it's next occupied.

bsder
0 replies
14h32m

Vacancies kill returns.

If you are an individual landlord, yes, as you are cash-flow sensitive.

However, a lot of these "landlords" are private equity companies and the complexes have financing agreements.

The issue is that "lower rent" can trigger a "recapitalization" clause on the financing agreement. When that happens, the PE company will have to cough up cash. "Missing" rent, however, is generally allowed to be tacked onto the end of the financing agreement. That creates a perverse incentive if the system is highly leveraged--nobody wants to cough up cash and everybody is willing to kick the can down the road. And the PE companies have enough cash flow from other properties that they can ride this out (until, obviously, they can't and everybody fails simultaneously--but then they'll whine to the government for a bailout ... that's a different rant).

The "solution" is occupancy taxes. An unoccupied residence or commercial spot should have to pay a significant amount of cash if it remains unoccupied for longer than 6 months to a year.

Rapzid
0 replies
15h46m

In the referenced case a management company was pressuring/forcing participants to go with the recommended prices.

InitialBP
0 replies
16h35m

That seems like a super obvious conclusion, the fact that it isn't what is actually happening is a good indication that it isn't as straightforward as you'd think.

This might be true for an individual that only owns one or two properties, but for a company that owns tens or hundreds of properties they can let stuff set empty to drive up prices on all of their other properties.

akira2501
1 replies
19h10m

Well.. if you agree to do something illegal in secret then this is "collusion."

Price fixing is a defined crime. So if your agreement is to fix prices between competitors in secret then you are "colluding."

The extension here is that if your agreement is to use similar pricing information sources, property availability lists, or algorithmic components, that this is a form of price fixing, and is thus also illegal, and so you "colluded" by forming this agreement.

The FTC's position is that the agreement itself is illegal. They additionally suggest that even if some of the competitors sometimes "cheat" on the agreement, that doesn't prevent the formation of the agreement itself from being a crime.

This all seems pretty straight forward. They committed a crime. There was no reason to form an agreement. Had they not done that, there would be no case, and no obvious intent. As it is, their intent was clear, to break the law at the public's expense.

This, by the way, is why we have ANSI and IEEE and ITU and all kinds of other "open" standards groups. If you don't do it in secret then much legal burden is immediately lifted from you.

ghaff
0 replies
17h31m

Trade associations basically have a long list of things at the beginning of every presentation that lay out the rules for why this isn't collusion.

quasse
0 replies
19h39m

It's not understanding the local rental market that's the problem. It's controlling enough of it that you can influence prices globally upwards outside of economic competition.

If 60% of a city's major property companies sign on with RealPage and *also* agree that they will not undercut the prices RealPage chooses (eliminating economic competition between the property companies), that's not just being a high information party, it's collusion.

The problem is that housing in major cities has a relatively fixed supply, so the colluding landlords know that even if a competitor undercuts them eventually they will simply fill their units and cease to be competition for new renters.

ummonk
9 replies
17h22m

I don't understand how it's possible that every single biglaw firm offers the exact same starting salary but that isn't considered illegal collusion, while landlords using a market-estimation service as a starting point for pricing their units (but sometimes pricing below or above the algorithm's recommended price) is considered illegal collusion.

tdb7893
2 replies
14h35m

So the thing with lawyers is that there is no communication (i.e. it's only "tacit collusion"). In this case there is communication via the company with the pricing algorithms.

My brother studied tacit collusion as part of his econ PhD (and new lawyers was one of the markets he looked at) but it would be a hard thing to actually legislate against and isn't illegal. You can't just be like "you guys can't pay the same".

lupire
1 replies
4h9m

Of course there is communication.

https://abovethelaw.com/2024/01/latham-salary-2023/

What's missing is the pressure on other firms to match. This is more like the leader raising pay and other firms chasing them.

tdb7893
0 replies
3h41m

I mean yeah they can see what other firms do but they aren't actually talking to each other (or at least not in a proveable way) to organize prices. It's a very different situation than having a business with an algorithm to share pricing models.

Obviously law firms colluding on prices isn't good but how they are colluding is completely different.

killingtime74
2 replies
16h49m

(studied competition law in law school). Everyone having the same starting salary can be arrived at by non-illegal means, such as seeing what the others are offering and matching. To successfully prosecute for price fixing you need actual evidence of collusion. That is usually obtained by whistleblowing, as the first person usually gets a reduced sentence (example: https://www.accc.gov.au/media-release/cartel-immunity-policy...).

Price fixing in buying/hiring is not monopoly btw, it's monopsony.

aerhardt
0 replies
9h3m

Sorry to nitpick on this tangential detail, but what does “reduced sentence” entail? On paper it sounds like many people would rather take the secret to their graves.

IshKebab
0 replies
5h33m

What counts as collusion? Would those services that privately share salary information between companies count? Doesn't seem too different.

pottertheotter
1 replies
11h36m

When I worked in investment banking 1st year analysts made pretty much the same base at every big bank. They all used the same compensation consultant, which seemed iffy.

rocqua
0 replies
11h23m

I doubt 1st year analysts have much salary complaints.

d0gsg0w00f
0 replies
17h2m

Probably because legal defense outside of public defender is considered a luxury good. And it's rare to need a public defender if you're living a "normal" life.

With housing, everybody has to live _somewhere_.

jeffbee
9 replies
17h54m

I don't get how this FTC position is compatible with the existence of things like commodity futures markets.

A second point that bothers me about the blog post. It's immaterial to the brief, but the blog says the rent is up 20% since 2020, citing CPI-U. But it fails to account for increasing incomes. Median household incomes, nationwide, have kept pace with rents.

arming9513
7 replies
16h59m

If income has raised by 20%, why should you expect rent to also increase by the same amount?

jeffbee
6 replies
16h39m

Because it's a market operating point set by supply and demand. Increasing incomes support demand and raise prices.

Eisenstein
2 replies
15h41m

Why do increasing incomes support demand? I am not going to move to another place exactly the same just because I make more money. In order for prices to increase, I would have to be moving into a better place than I am in now, which means it would cost more anyway. Me moving laterally gives me no utility.

jeffbee
1 replies
14h57m

In the American rental market, for most lessees, the lessor can raise the price an arbitrary amount periodically. This is true for virtually all tenancies in this country.

Eisenstein
0 replies
9h32m

Sounds like that isn't a market force if they do it without demand changing.

Dylan16807
2 replies
15h40m

If "support demand" means people want better homes, then that's fine.

If people are spending more real money to get the same housing, something has gone wrong.

bluGill
1 replies
10h40m

The landlords costs hake also gone up 20%

willis936
0 replies
6h19m

Operating, not capital. Real estate is a capital heavy area.

kristjansson
0 replies
15h19m

commodity futures markets

What? Commodity futures are viciously competitive open markets, where do you see the connection?

tz18
7 replies
17h18m

Could this change how tech salaries are set? I know many companies base their salary grades on an algorithm that amounts to looking at what "comparable" companies are doing and aiming for the middle of that.

silisili
4 replies
16h9m

They're seemingly already doing that for benefits. I've had benefits reduced at two separate places 'because our research shows we were a little over for similar companies.' If that's not collusion, I don't know what is.

cperciva
2 replies
15h23m

Collusion is if they, well, collude. Copying is not the same thing as colluding.

acuozzo
1 replies
13h2m

At some point copying does become tacit collusion, though.

willis936
0 replies
6h28m

No. Collusion requires agreement among the parties to not compete. Sure they copy but no one is forcing you to stay at the company or accept the new job offer. You walk to somewhere that does meet your ask or negotiate.

It's collision when companies agree to not compete.

ChadNauseam
0 replies
2h24m

If you say “I want a raise because people in the same position at other companies make more money” is that collusion too?

izacus
0 replies
4h31m

The tech companies already got punished for salary collusion and it didn't really change anything.

WirelessGigabit
0 replies
16h48m

That would be nice. It's such an easy defense for companies to say: this is what the market pays.

ilikehurdles
7 replies
20h3m

an agreement to use shared pricing recommendations, lists, calculations, or algorithms can still be unlawful even where co-conspirators retain some pricing discretion or cheat on the agreement.

Someone explain how this is different from pricing vehicles based on KBB or other data? Genuinely curious because I don’t know what these agreements look like.

If multiple seller/landlord parties all agree to have a single algorithm set prices I understand the FTC’s point. If however they all reference an algorithmic data point and freely choose to set prices I don’t see how that’s collusion.

rahimnathwani
5 replies
19h59m

  If multiple seller/landlord parties all agree to have a single algorithm set prices I understand the FTC’s point. If however they all reference an algorithmic data point and freely choose to set prices I don’t see how that’s collusion.
You've hit the nail on the head. It's the former, which is why it's collusion.

tyingq
2 replies
19h49m

I imagine it's tricky to really prove. Airlines, for example, have been doing somewhat similar things for decades, but there's no simplistic path to showing collusion.

willis936
0 replies
6h15m

Funny you mention that. One of RealPage's architects has experience in making cartels in the airline industry, and getting caught. The trick to getting caught here is to be very blatant and just pretend the law doesn't exist.

https://www.propublica.org/article/yieldstar-rent-increase-r...

A genial, self-described “numbers nerd,” Jeffrey Roper was Alaska Airlines’ director of revenue management when it and other major airlines began developing price-setting software in the 1980s.

Competing airlines began using common software to share planned routes and prices with each other before they became public. The technology helped head off price wars that would have lowered ticket prices, the Department of Justice said.

The department said the arrangement may have artificially inflated airfares, estimating the cost to consumers at more than a billion dollars between 1988 and 1992. The government eventually reached settlements or consent decrees for price fixing with eight airlines, including Alaska Airlines, all of which agreed to change how they used the technology.
ghaff
0 replies
17h26m

Pretty much all companies, especially large ones, rely on a series of intermediary sources for things like pricing, salaries, etc. They're not constrained by those sources for individual products, services, and people but they're absolutely aware of them. And it's probably a fairly short distance from there to "We're not going to pay you more than an equivalent level at Google" whether or not that's explicitly stated.

ilikehurdles
1 replies
19h48m

But based on the post, this really seems to not be the case?

"Price deviations don’t immunize conspirators. Some things in life might require perfection, but price-fixing arrangements aren’t one of them. Just because a software recommends rather than determines a price doesn’t mean it’s legal. Setting initial starting prices or recommending initial starting prices can be illegal, even if conspirators deviate from recommended prices."

Would be better to see an argument from the FTC grounded in evidence and analysis, because I don't get what this is based on. Software recommends a price, sure, but so does any appraisal in any industry. For how long can I use an appraisal service before the FTC says I'm committing a crime? I just feel like the lines are not drawn very clearly with this argument.

Aside, if anyone from the FTC is here right now, for God's sake do not use "IRL" in official writing.

rahimnathwani
0 replies
19h20m

  But based on the post, this really seems to not be the case?
I don't understand how you came to that conclusion. From the post:

  an agreement to use shared pricing recommendations, lists, calculations, or algorithms can still be unlawful even where co-conspirators retain some pricing discretion or cheat on the agreement.
Also from the post:

  The agencies filed a joint legal brief explaining...
From that legal brief (emphasis mine):

  ... when competitors *agree to fix* end prices, ... *the agreement* is the violation, and unsuccessful price-fixing schemes are as unlawful as successful ones.
Another commenter asked how this is different from car dealers using the KBB values. If a deal uses KBB values to inform themselves of the approximate value of a car, before deciding their opening bid/offer in a negotiation, that's fine. If they agree with a neighbouring dealer that they'll always start their negotiation with the KBB price, this is illegal price fixing. From the brief:

  In Plymouth Dealers’ Association, 279 F.2d 128, for instance, a defendant convicted of price fixing for agreeing with competing dealers on a “fixed uniform list price” for Plymouth cars argued that the conviction could not be upheld because the government’s case required “proof of something more—that [the uniform list price] was adhered to; that it was utilized to fix prices; or that it did actually fix prices.” Id. at 130. The Ninth Circuit rejected this argument, stating that “the fact that the dealers used the fixed uniform list price in most instances only as a starting point[] is of no consequence.”
Pages 23-24 (PageID #6982 and PageID #6983) of the PDF explain how the collusion was orchestrated: https://www.ftc.gov/system/files/ftc_gov/pdf/YardiSOI-filed%...

Rapzid
0 replies
19h4m

some pricing discretion

That's the key. The problem is the agreement; that results in price fixing. Even if someone is allowed "some pricing discretion"(ie maybe they can deviate 8%) it can still be illegal.

Maintaining full pricing discretion is what referencing KBB on your own and making a determination outside a pricing agreement would be; not illegal.

From what I can tell. Not legal advice.

advael
7 replies
17h31m

I think the only reason this should be surprising is that we've let it be the status quo for so long, despite being pretty obviously illegal. Nonetheless it's good that the FTC has explicitly made a commitment to start enforcing the law

nerdponx
6 replies
17h26m

It's nice when federal agencies are funded and led by people who aren't trying to sabotage them from the inside.

Ignoring all other considerations, the current incumbent political party in the US presidency on average tends to produce effective & functioning federal agencies, and the other party on average tends to produce corrupt & dysfunctional federal agencies.

I try to point this out frequently because voters tend to ignore this kind of thing until it affects them personally, or they read about some isolated grievance in the news. But it really should be considered a more important topic.

gotoeleven
3 replies
13h3m

and the other party on average tends to produce corrupt & dysfunctional federal agencies

the federal agencies are mostly employees have been there through many administrations. How do they suddenly become corrupt and dysfunctional besides these employees (90% of the current incumbent political party) suddenly becoming corrupt and dysfunctional?

rocqua
0 replies
11h16m

Employees will often internalize past actions they took, whether forced to by their bosses or not, as good actions. they will even build up a worldview to support those actions. For the alternative is to accept that you were bad, or even evil.

That means leadership can change the course of an organization by ruthlessly making them do other things until people internalize those things as the right thing, or leave.

That only explains decay though, not the magical idea that under the right party things spring back. The best to hope for is a democratic president to slow down the decay. But it is simply so much easier to tear things down than to build things up, that it will take a lot of democrats to see actual improvement.

goda90
0 replies
11h51m

Employees still have to follow their politically appointed bosses at the top or risk being fired.

frob
0 replies
2h24m

This is mostly true and is part of what helped soften the absolute disaster that the Trump administration was. In multiple instances, Trump and his ilk wanted to do absolutely illegal and unconstitutional things but we're thwarted by career civil servants.

However, they've learned. At the end of his term, Trump created a new classification of employment, Schedule F. Schedule F employees did not have civil-service protections and could be fired on a whim. Fortunately, he lost the election before he could use it. Biden removed it.

Now, Trump-aligned groups like the Heritage Foundation are running programs to recruit Trump loyalists whose main and almost sole qualifications is loyalty to Trump (see Project 2025). They don't want a repition of last time where federal employees had the gall to actually follow the law instead of the dictator.

staplers
1 replies
14h45m

  voters tend to ignore this kind of thing until it affects them personally
And when it finally becomes a problem that cannot be ignored, scapegoats will be found and used, even if they have to be invented in a fairy tale (internet conspiracy).

advael
0 replies
14h33m

Often it suffices to blame the agencies themselves, citing the very failures caused by mismanagement, corruption, and underfunding as evidence of the foolishness of using government agencies to do things. This in turn is the kind of nonsense you can get people to believe if you've systematically misinformed them while also convincing them they can't trust other sources, which is another well-known strategy of the same political faction

usui
6 replies
19h50m

Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL. When you replace once-independent pricing decisions with a shared algorithm, expect trouble.

There are probably other things I should comment on first instead, but this usage of “IRL” made me laugh. I grew up with the initialism IRL while chatting online as a small kid so when I emailed a teacher where I accidentally wrote “IRL”, he quipped, “What? As opposed to us meeting ‘in fake life’?”

Now I feel jokingly vindicated against Mr. Teacher as this is the first time I read a government website use IRL. It would seem that algorithms and cyberspace aren’t part of real life to the government, even when it’s about housing price collusion, one of the realest real-life things I can imagine!

SilasX
4 replies
19h43m

Haha yeah that’s often what happens, a useful slang expression becomes so widespread that eventually they accept it in formal context.

I joke that, given enough time, the “English future tense” they teach will be “to be gonna”.

aaomidi
3 replies
17h55m

Language evolution is honestly great. There's a lot of pearl clutching that happens about it, and policing around what's "ok" English or whatever. But yeah, evolution of language is beautiful IMHO.

trimethylpurine
1 replies
15h49m

>IMHO

As opposed to your dishonest opinion?

trimethylpurine
0 replies
13h38m

I'm sad that you took offense and downvoted. I guess you didn't read the first comment? It was meant as a joke on the absurdity of asking what it's opposed to.

>I accidentally wrote “IRL”, he quipped, “What? As opposed to us meeting ‘in fake life’?”

SilasX
0 replies
15h50m

Always?

__s
0 replies
17h44m

TBF the usage is not saying it's legal online. They're saying the loophole is imaginary, existing in the minds of the colluders

lifeisstillgood
6 replies
19h34m

Wait. If landlords gather information about all other rents in the country, and then use that to set a price for their rents, that, cannot surely, be price fixing.

So is the problem the “RENTmaximizer” software and other services that basically gather price information ?

Because if perfect price information is available, and yet there is no competition in the market driving prices down, well, that’s rentier markets for you.

There must be an economics PhD or two in that

chefandy
4 replies
19h13m

From the blog post: Algorithms that recommend prices to numerous competing landlords threaten to remove renters’ ability to vote with their feet and comparison-shop for the best apartment deal around.

From the brief: To participate in the service, landlords must share in “real-time” their “non-public,” “competitively sensitive” data, including actual rents paid, occupancy rates, and records of lease transactions. [Multifamily Compl. ¶¶ 227, 380.] RealPage then feeds “this data into a common algorithm.” [Student Compl. ¶ 5;] [Multifamily Compl. ¶ 380.] The common algorithm uses these common data for a single, common purpose: to generate “forward-looking, unit-specific pricing and supply recommendations” for all participating landlords. [Student Compl. ¶ 5.] To ensure that the landlords abide by these “recommendations,” RealPage puts significant “pressure” on them “to implement RealPage’s prices,” including by requiring clients to submit requests to deviate to the “corporate office” and tracking the “identity of the client’s staff that requested a deviation.” [Multifamily Compl. ¶¶ 17-20, 261-86.] As a result, landlords using RealPage adopt RealPage’s recommendations 80-90% of the time. [Id. ¶ 15.] The complaints allege that RealPage was clear about the purpose of its common pricing scheme: to increase prices above competitive levels through collaboration.

Doesn't sound like the natural ebb and flow of the market to me.

scrps
2 replies
17h54m

That sounds like a dark pool for the rental market.

kristjansson
1 replies
15h24m

The rental market analogue of a dark pool is the rental market. All transactions are secret by default, allowing higher-information parties (landlords) to set prices that are advantageous to them, and prevent transactions from moving the market.

These algorithmic pricing systems extend that information advantage by pooling information across landlords (maybe not illegal by itself) and leveraging their position as market-wide price-setter to push rents higher, with the promise that so many units are following their recommendations that renters have ~no alternative (very illegal price fixing)

scrps
0 replies
12h57m

The rental market is a decentralized network, with companies like these the network gets routed through a central node and the operator of that node has pefect visibility while the connections being routed have no idea what every other connection is doing like a dark pool, it's the centrality that makes it an analogue.

I could think of several advantageous moves like artificially inflating rents then favoring a well paying client by keeping their rents lower than the market. Investing in property spread out across shell companies and then have the algo favor them in a non-intuitive way.

ummonk
0 replies
17h17m

Yeah the brief seems to be describing a much more clearcut example of collusion than the intentionally vague and broad blog post is trying to imply.

mcmoor
0 replies
18h43m

Yeah I see the app just as a "public stock market" of real estate. If information is free, this is what it'll look like. We don't call stock market a price fixing scheme aren't we?

But the other comment says something about coercion. Now that's what price fixing is.

jml7c5
6 replies
15h51m

As a renter myself, I have tremendous sympathy for the tenants affected by this. But there is a way to frame this whole saga that makes it much more innocuous:

By maximizing individual profit, the software rapidly finds the real fair market value of rentals. It turns out that the fair market value for rentals is much higher than people thought! This should make sense: housing supply is low, housing demand is high, and housing demand is extremely inelastic. It is a situation where egregious profits should be expected! Landlords simply hadn't realized that they could charge more.

There is one seemingly illogical result, which is that some units go vacant despite the huge demand. But unsold goods are a normal part price discovery, and we are not talking about a huge change: occupancy rates only drop a few percent.

It's a brutal result for tenants, but the alternative is incorrect pricing, which has its own negative implications for the whole market.

willseth
2 replies
15h27m

With price fixing, would-be competitors cooperate and function as a monopoly. That’s not a functioning market. These services act as a centralization point to accomplish the price fixing without colluding directly with each other. It’s actually much more efficient than traditional price fixing!

jml7c5
1 replies
15h6m

Out of curiosity, where do you draw the line? Say there was some open-source pricing tool that runs completely locally, operating only on public data and not sharing information with others. Would you consider it price fixing if it became standard practice to use it?

simoncion
0 replies
2h44m

Would you consider it price fixing if it became standard practice to use it?

If competing businesses agreed to use the tool and not deviate (or not deviate more than a set amount) from its suggested price, then yes, that's totally price fixing.

I believe that it's price fixing even if they merely agree to use it to inform their starting offering price.

In some other comment thread, folks mentioned that if a landlord outsources rent price investigation to a third party, that third party has to be __very__ careful about working with other landlords, so as to not even accidentally engage in price fixing by recommending prices to multiple competing landlords.

Dylan16807
2 replies
15h45m

the software rapidly finds the real fair market value of rentals.

That's cool and all but the price should be somewhere between the supplier cost and the purchaser value, not pegged at the top.

real fair market value

Only if there's strong competition.

jml7c5
1 replies
15h12m

between the supplier cost and the purchaser value

It is — it just turns out that the purchaser value is quite high!

Dylan16807
0 replies
13h8m

The value of not being homeless is extremely high.

Which is an objectively bad price for housing.

madsbuch
4 replies
7h32m

Tangential to this: In Norway and Denmark (as the only countries AFAIK) there are laws stating that a unit needs to have inhabitants. Ie. it can not sit still on the market. If the owner does not live there, he has to rent it out.

It baffles me, that this is not a general rule as it forces fair market prices for a illiquid supply (it takes time to build new housing, if it is even possible).

In this case you'd just complain that a company keeps units vacant to the municipality who would fine the company until it is brought in order.

dublinben
1 replies
4h24m

Despite what is going on with this rent price collusion situation, the problem that high priced cities face is far too few vacant apartments not too many. The vacancy rate in some places is as low as 1-2%, which is much lower than it should be.

madsbuch
0 replies
4h11m

Oh yes, I completely agree. These are also issues in both Oslo and Copenhagen.

But having rules like this removes some speculation.

distances
0 replies
7h29m

Berlin has similar legislation. I doubt there's much enforcement about it, I would imagine that someone has to file a complaint or something before anything happens for an empty flat.

amsterdorn
0 replies
7h12m

Would be a highly effective way to increase housing supply, but this would favor people over govt/big firms & that doesn't happen in the US (sadly).

csa
4 replies
20h15m

I would like to see that this action will lead to meaningful change in (imho) an unhealthy rental market.

Unfortunately, I think the genie is out of the bottle, and the actions by the ftc will be reduced to whack-a-mole attempts to bust transgressors who make the effort to have plausible deniability while still using price-fixing algos.

nurtbo
3 replies
19h48m

Adding to that: once you’ve shown that keeping rates high while allowing greater vacancies works, no one is going to lower rates afterwards. So we are stuck with this higher rent environment.

ClumsyPilot
1 replies
16h59m

What do you mean? Of course price-fixing and market manipulation works, that’s why criminals do it!

There is no limit to Price fixing for inelastic good like food, housing and medicine.

nurtbo
0 replies
54m

Totally agreed. I’m unclear whether eliminating this (or even all) mechanism for price fixing on rent will cause prices to drop.

indecisive_user
0 replies
14h15m

It's only profitable because of price fixing. You don't have to worry about vacancies when all your competition has agreed not to undercut you.

Without the price fixing though, apartment complexes will actually have to compete against each other on rent.

HaukeHi
3 replies
18h14m

Isn't Airbnb doing the same?

wolverine876
1 replies
17h57m

How so? Is Airbnb colluding with competitors?

aaomidi
0 replies
17h54m

I think Airbnb recommends a price to set your place to? I know there's also some external software that do that too.

Based on the understanding of the post, I think both of those would be considered price colluding.

petesergeant
0 replies
17h6m

No, because Airbnb is sharing market information with you, and is quite happy for you to undercut the market to drum up demand, or raise prices if you think you’ve got a winner, which keeps market efficiencies intact.

What’s described in the article is a bunch of estate agents agreeing to use a price recommended by 3rd party software and minimize cheating on that price, which is price fixing.

maerF0x0
2 replies
14h16m

First off. I dont like collusion or rental pricing software that colludes across companies. However, now this means really big companies can use their own internal data to get advantages that littler players cannot. I also do not like laws that favor big companies over little ones. With the collusion software then littler companies could at least band together to get similar competitive effects that larger companies can.

I'm open to discussion of how to resolve that though, any ideas?

willis936
0 replies
6h25m

Simple: the big players will need to compete again. They can charge high rates but they will face high vacancy in the face of nearby housing units interested in low vacancy.

Jochim
0 replies
5h28m

Kill the larger companies.

pipes
1 replies
8h22m

Price fixing is when two or more land lords agree to not lower their prices beyond a certain point. There is no agreement here. I don't see how this is price fixing.

rsaxvc
0 replies
4h32m

You could review their argument: https://www.ftc.gov/system/files/ftc_gov/pdf/YardiSOI-filed%...

Search for "adherence to the agreed-upon Prices", "fix list price", and "Express delegation".

They argue that collusion through delegation counts as price fixing. They argue colluding to set list prices even when there isn't a price floor is price fixing. They argue that replacing the delegation with an algorithm is still price fixing. Most of their arguments are based on already settled cases.

koliber
1 replies
8h17m

This is a case of information asymmetry being used as an additional advantage by property managers.

The software cited, RENTMaximizer, offers aggregate price information for property managers with the aim of maximizing prices.

Would a RENTMinimizer product, given away for free to tenants, help? It would show aggregate rents that tenants pay, including minimum ones, with the hope that they can use this information for more confidence when negotiating rents.

harvey9
0 replies
7h52m

No, it is an agreement between suppliers to set prices. Per TFA, one of the goals is to prevent property managers from negotiating with tenants.

jhanschoo
1 replies
19h29m

Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL. When you replace once-independent pricing decisions with a shared algorithm, expect trouble.

Enjoyable to watch norms about language (IRL) change.

berniedurfee
0 replies
15h46m

I was thinking the same thing. I had to double check that was an article on a .gov website.

I think it’s refreshingly well written and accessible. Not an 800 page blob of legalese.

Nice job to the authors.

gorgoiler
1 replies
12h11m

Lots of tech companies use Ravio, Pave, etc to track the compensation their competitors are offering employees at similar levels. These tools plug straight into your payroll to give all the participants “live” market data.

Isn’t this also price fixing?

rocqua
0 replies
11h24m

Is it recommending salaries?

The issue with the rent thing is that the algorithm sets a price, so collusion could easily be offloaded onto the algorithm. Something similar should also happen with salaries before this becomes a real problem right?

c0balt
1 replies
5h43m

[..] a brief filed by the FTC and the Department of Justice offers a helpful guideline for antitrust compliance: your algorithm can’t do anything that would be illegal if done by a real person.

That one weird trick that doesn't work well under the law.

xattt
0 replies
5h40m

Has this defence worked for people caught up in copyright infringement lawsuits who claim that an infringing torrent download was initiated by something like Sonarr/Radarr?

EchoReflection
1 replies
11h46m

"rent is up nearly 20% since 2020" but is that taking into account the change in the value of the dollar and changes in the consumer price index?

https://www.in2013dollars.com/us/inflation/2020?amount=1

$1 in 2020 is equivalent in purchasing power to about $1.19 today, an increase of $0.19 over 4 years. The dollar had an average inflation rate of 4.48% per year between 2020 and today, producing a cumulative price increase of 19.17%.

This means that today's prices are 1.19 times as high as average prices since 2020, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 84.034% of what it could buy back then.

gas was $3.22 in 2020 but is 42.17% higher in 2024, so by that metric rent is proportionally lower (than the 20% increase in rent)

Things changed rather dramatically, theoretically,because of different presidential puppet-string-pulling in terms of the FTC: https://www.skadden.com/insights/publications/2021/06/lina-k...

https://www.bbc.com/news/world-us-canada-55738746

After less than 24 hours in office Biden signed 15 executive orders whereas Trump had signed 8 after two weeks (Obama had signed 9 after two weeks).

https://www.bbc.com/news/world-us-canada-55738746

information that comes from government agencies is almost always data that has been arranged in such a way as to make those in power look like they're the good guys.

isthatafact
0 replies
6h48m

Considering that rent is around a one third contribution to US inflation measuremnt (which is done by some indirect estimation), I would also ask how much inflation that software caused by essentially a feedback loop.

xbar
0 replies
17h50m

Maximum prison sentences, please.

trimethylpurine
0 replies
16h55m

Lots of people are saying it's the same as doing it manually with public data. I don't think that's the issue. The article is explaining that the focus is the shared pricing database.

Public information doesn't tell you if competitors will underprice to sink you, or if they are likely to hold a high price even against lower occupancy. This software tells you and your competitors whether or not to do that, and bases that guidance on its inside knowledge of its own customer base. That is what the FTC and DoJ are calling collusion, based on my reading of the article.

renewiltord
0 replies
7h46m

That seems obvious. Otherwise my Cartel LLC can just provide price-fixing software that you can white box to bypass anti-price-fixing laws.

refurb
0 replies
15h1m

One interesting things that Singapore does is that it collects and shares all rental data.

When you lease a place to a tenant, there is a stamp duty ($100+) that the tenant pays. Then the landlord submits details about square footage, number of rooms, and the price it was rented at.

Then the government shares the data in an aggregate manner: https://www.ura.gov.sg/Corporate/Property/Property-Data/Priv...

mizzao
0 replies
14h9m

Is every FTC article usually written in this accessible and readable language?

justinclift
0 replies
19h40m

Weirdly, the FTC site seems offline:

    NOTICE: The FTC website is currently unavailable. Thank you for your patience while
    we work to restore service.

hnburnsy
0 replies
14h54m

The Department of Justice has previously secured a guilty plea related to the use of pricing algorithms to fix prices in online resales.

This is no idle threat. Be sure to click on that link and find out that in 2018 the FTC stopped the greedy corporate profiteers in the wall poster industry from price fixing back in 2013. Algorithmic price fixers beware.

globalnode
0 replies
8h33m

these services are a form of collusion that basically bypass normal supply and demand and are effectively anti-free market. i can see it being ok if all the properties were owned by one person (which they aren't) but then the gov't would be within its rights to go break it up as an unfair monopoly. which i might add, is a monopoly on a basic human need for shelter. a right even? this is corrupt greed at its worst, market manipulation at best.

exabrial
0 replies
17h21m

I'd like to see thousands of apartments hand back the increases to renters they illegally collected.

dmitrygr
0 replies
12m

since when did the FTC switch to SMS-speak?

Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL.

"IRL"?

dclowd9901
0 replies
18h58m

There’s no other way around this but to shut down industries that provide this kind of service make it illegal to have automatic price setting.

buzer
0 replies
17h37m

If this lawsuit is successful, would renters have standing to sue for damages? And how far would the liability go, just their landlord + RealPage (who is probably bankrupt by that point)? Or would everyone who colluded to keep prices high be liable, possibly even to renters whose landlord was not part of collusion but rents in the area increased due this?

amath
0 replies
12h27m

Maybe this is a stupid question, but how would airbnb be looked at using this as precedent. If I sign up for airbnb and use their automatic price optimization engine would this fall under the same algorithmic collusion?

SergeAx
0 replies
11h5m

Is there a way to keep rent prices in check without strong market regulations? Every business will do everything legal to max out the profit, this is a nature of business. Freezing prices in some places will only rise it everywhere around. Building more is not an answer: most large cities has no adequate lots for new buildings, and where they do - it is undeveloped areas, where no one wants to live.

We thought that cars is answer, but cars only deferred the market saturation, plus we need more roads and parkings.

Remote work may be an answer, but people still need schools, shops and restaurants.