Pricing Software Adds Billions To Rental Costs, White House Says 91
Renters in the U.S. spent an extra $3.8 billion last year because of pricing algorithms used by landlords, according to an analysis from White House Council of Economic Advisers. Axios reports: The report puts some hard numbers to accusations that have piled up against RealPage, a company that makes software that helps big landlords and property managers set prices. In August, the Department of Justice filed an antitrust suit against the company, alleging its pricing algorithm allows landlords to collectively push rents higher.
Let's hope that DoJ suit continues (Score:5, Funny)
There's a risk that the suit will be dropped by the incoming administration as they review priorities. But I can't imagine a man of the people, like real estate mogul property investor and landlord Donald Trump, would prevent a lawsuit from going ahead to stop landlords from indirect price fixing to keep real estate rental prices high.
DoJ closed criminal probe (Score:1, Troll)
DOJ drops RealPage antitrust case: Case closed as President-elect Trump is expected to de-emphasis antitrust enforcement [therealdeal.com] (12/4/2024).
Note: This is based on a press release from RealPage. Caveat reader.
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Caveat reader.
Caveat Lector
The state AGs are the only hope now (Score:2)
Local elections *matter*. A lot. Your State AG, Sec of State and Governor in particular have enormous power over the quality of your life.
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I'm particularly happy about this one, since two of the proposed "divested" stores are the two closest grocery stores to my house.
Kroger can go fuck themselves.
Not just landlords, hotels too. (Score:5, Insightful)
Video from More Perfect Union on how hotels are fixing prices: https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3F... [youtube.com]
Re: Not just landlords, hotels too. (Score:3, Informative)
All to do about nothing, 3.8 billion. There are 43 million rentals (1), that is a whopping $88 per rental PER YEAR. Omg call the feds, swarm swarm swarm!!!
https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.thezebra.com%2Fresou... [thezebra.com] to the US Department,rent-based households in America.
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It's not spread evenly over all rentals though. Some pay well over the odds, some not at all.
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The question is not the 88 dollars, it's the precedent it sets for future collusion and price increases. It won't stay at 88 dollars if they can get away with it.
Question the collusion, not the result of the collusion. The collusion results in landlords having too much power, like any monopoly. The software enables the de facto monopoly.
"If they can get you asking the wrong questions, they don't have to worry about the answer." - Thomas Pynchon.
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Laws against price fixing don't have exceptions for "it's not so bad yet".
Taking money out of the economy (Score:5, Insightful)
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That would apply to everything. Why waste money just save it...
The only way to fix housing is to build housing. The only reason landlords can get away with fixing rents is if the supply is limited.
If you want lower prices on everything, then free up money being "wasted" on rent.
This would just increase inflation. The effect would be the opposite. Everything would be more expensive
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Building housing alone is not enough. They are building larger square footage to keep sale price and rents high. You would have to incentivize building smaller units in order for this to ever help.
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People move.
People that are in smaller housing and want a larger place move into the newer larger places, freeing up their smaller (and in theory, cheaper) place unless the owner bulldozes it.
Which brings us back to: just build housing. Even if it's only larger housing, there's a waterfall effect that makes existing smaller housing become available.
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Houses fall apart and require maintenance or renovation. If renovating isn't profitable enough, bulldozing and building bigger will be. It raises prices gradually, but consistently.
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People that are in smaller housing and want a larger place move into the newer larger places, freeing up their smaller (and in theory, cheaper) place unless the owner bulldozes it.
Near me builders buy small houses, bulldoze them, and build larger houses in their place. The problem is zoning. If the government allowed enough houses to be built, builders would build affordable homes. But the government is restricting zoning. So the only option is to spend a million dollars on an enormous house.
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The problem is zoning. If the government allowed enough houses to be built, builders would build affordable homes. But the government is restricting zoning.
Bullshit. I've never seen governments "restricting zoning" for houses. The problem tends to be builders buying up plots of small houses to replace with expensive McMansions and townhomes/condos that cost far more, and then foreign companies that buy up properties and convert them into permanent rental status that then gets price-fixed like the lawsuit
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Building housing alone is not enough. They are building larger square footage to keep sale price and rents high. You would have to incentivize building smaller units in order for this to ever help.
You ever seen a magician cut something in two before?
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Ah, but building twice the size doesn't mean twice the price. Developers think that they can charge premium prices for their "mansions" (definitely not built to the actual quality of a real mansion, hence the term McMansion) So what they build are twice the size, four times the price.
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Larger square footage has been a problem for decades. It was a factor back in 2008.
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The only way to fix housing is to build housing. The only reason landlords can get away with fixing rents is if the supply is limited.
That's not the way it works. Landlord's all use software that not only shares their pricing decisions but recommends prices based on the database of everyone's pricing decisions.
That means it provides guidance on how to set prices to maximize revenue, essentially when a higher price on all occupied units makes up for the lost revenue from empty units created by the higher price. The result of that is where landlords used to only tolerate a 1 or 2% vacancy rate before cutting prices, they now allow 2 to 5 t
Re: Taking money out of the economy (Score:3)
"The only way to fix housing is to build housing. The only reason landlords can get away with fixing rents is if the supply is limited."
Your second sentence doesn't support the first.
We could institute a federal empty unit tax. We could prohibit capital investment in residential properties by index funds. We could ban airbnbs. We could tax flippers. There's in fact many different things we could do to increase the supply of available housing, because even in California there are multiple empty housing units
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We already tax flippers.
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Tax them harder. They're driving up the cost of housing. Make it not affordable. You should at least have to add value by repairing damage.
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How do you implement such a change in tax code to differentiate a "house flip" from some other transaction that might not have the listed economic downsides?
The only thing a house flipper does is buy real estate and then resell it. Which describes nearly every real estate transaction ever. Beware unintended consequences.
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How do you implement such a change in tax code to differentiate a "house flip" from some other transaction that might not have the listed economic downsides?
Based on assessments at the time of purchase and sale. Got any hard questions?
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Flippers get capital gains tax rate. That's FAR under normal income tax rates.
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Flippers get capital gains tax rate. That's FAR under normal income tax rates.
The long term capital gains tax rate is, indeed, lower than the normal tax rate... 0, 15, or 20% depending on what your income is. On the other hand, people flipping houses likely don't benefit from that, because that requires holding the asset for more than a year and people flipping houses aren't tying up capital for that long (unless something goes terribly wrong with their project).
They are assessed "capital gains" taxes, but the short term capital gains tax rates are identical to the taxes on ordinary
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Did you read my second sentence?
The only way to fix housing is to build housing. The only reason landlords can get away with fixing rents is if the supply is limited.
It supports my first sentence.
We could institute a federal empty unit tax. We could prohibit capital investment in residential properties by index funds. We could ban airbnbs. We could tax flippers. There's in fact many different things we could do to increase the supply of available housing, because even in California there are multiple empty housing units for every homeless person.
Every single item you listed will increase rents. Units need to be empty to be renovated. Removing money from housing will not generate more housing. You could ban whatever you want the reason AirBNB exists is because their is a demand, you are not addressing the demand. Because they are empty does not they are fit for purpose nor does it address the issue why people are homeless.
You sound like someone who is not even aware what the issues are an
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It's not clear that the cause of this is a lack of housing. There are as many housing units per individual and per household as there were at the height of the first housing bubble, the last maximum. If the problem is too many investors with too many housing units, you can't build your way out of that.
Now... if they're undercounting immigrants, of which we had a surge, both legal and illegal, then perhaps that wouldn't show up in the official number of housi
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Assets depreciate and cost to maintain. The only way investing in empty units works is if there is more of a demand than supply.
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so let me take out 100 dollars a month from everyone's paycheck and let the money be spent on capital improvements to make all employees more efficient and productive instead of spending it on things like iPhones and streaming services...
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Your argument is pretty flawed.
If people had $100/month more available to spend, that does not bring prices of anything down in any scenario.
Far more likely it results in them going up.
Re: Taking money out of the economy (Score:2)
They would go up, but not likely to go up more than $100 a month. That would still mean more money for food and bills.
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That's unlikely.
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"We should keep prices high to prevent inflation" is a hell of a take, but pretty on brand for modern opponents of reining in the misbehavior of the elites.
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The post i replied to argued.
"If you want lower prices on everything, then free up money being "wasted" on rent."
Reducing the price of rent 'somehow' would never in a million years reduce the price of everything else. That not how the economy works.
I am not arguing that we should keep prices high to prevent inflation. And I agree with everyone who says rents are too high. And I triple-agree with everyone who wants to shut down this rental price fixxing scheme. But after you do that, even if rentals get more
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Imagine if say just 100 a month was taken off everyone's rent, that means $100 more than can be spent on food and other goods that provide real value to the economy, instead of just being "sunk" into anonymous mortgages. If you want lower prices on everything, then free up money being "wasted" on rent.
The problem with that is that the proles might be able to save that money and afford their own place. Doubly so as the investment vehicles are less vauluable as you can't use higher earnings to drive the value of the property up. Clearly a catastrophe that needs to be stopped.
supply and demand (Score:1, Insightful)
Re:supply and demand (Score:5, Informative)
Pricing fixing is illegal. Coordinating with your competition, even if it's through an app, is illegal. This isn't supply and demand, it's price fixing.
Price fixing isn't always price fixing (Score:1)
Fully transparent "price fixing" - like when gas stations all post their prices and adjust to what their competitors are doing - is legal even if it leads the lowest-price station to raise their prices to just below the 2nd-lowest-priced nearby station.
The problem with RealPage etc. is that the information that's available to the landlords (albeit indirectly, via a third party) isn't available to the general public. If rental prices and other information collected by RealPage was all available to the gener
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You sure about that? It's still fixing a price, even if the information is public.
FTC: Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors to raise, lower, maintain, or stabilize prices or price levels.
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If you read the filing from the DOJ [justice.gov], those are the literal words of a landlord regarding RealPage's software. If you go to page 53 (real page 53, not numbered 53) this is the exact quote:
One potential client put it succinctly to RealPage: "I always liked this product [AIRM] because your algorithm uses proprietary data from other subscribers to suggest rents and term. That's classic price fixing . . . ."
It's not a crime if it's not enforced (Score:3)
We selectively enforce laws. If I steal $500 from Disney I'm going to jail. Disney steals $233m from workers and they only have to pay it back after they get caught and even then they keep the interest, nobody responsible goes to jail and they'll weasel out of a ton of it anyway.
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Pricing fixing is illegal. Coordinating with your competition, even if it's through an app, is illegal. This isn't supply and demand, it's price fixing.
Something is illegal only if a law is enforced.
Re:supply and demand (Score:4, Informative)
It's also not supply and demand due to tax cuts... (Score:2)
Of course there are consequences (Score:2)
The wealthy don't need loans (Score:2)
Re: The wealthy don't need loans (Score:2)
Mortgage interest is only deductible for your primary residence.
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Re: It's also not supply and demand due to tax cut (Score:2)
Look up Land Value Tax/Georgism.
Basically tax land by value, disregarding whatâ(TM)s built on it. Means itâ(TM)s hugely wasteful to have land not doing anything, especially in areas of high demand.
Not quite. (Score:2)
You said "If you ever have to interact with a rich person, you'll frequently hear "oh, you own stock?...that's "cute."....you know the real money is in real estate!!!""
Where are you getting that? Are you aware that The wealthiest 10% of Americans own 93% of stocks? [yahoo.com]
There is tremendous money in owning stocks, all rich people do it, and in fact they tend to have most of their wealth in that form.
Real-estate can be in investment too, especially when there is a housing crisis driving the value up. As it stands
You're talking rural/suburban areas, not urban (Score:2)
The law that you are proposing is not needed and won't solve the problem, because the problem you are trying to solve (too many people "hoarding real estate") is not the problem we actually have. The problem we actually have is "nobody is building houses." Some is due to zoning and some is due to hesitancy as I mentioned before. And from what I have read recently, the construction companies that ARE building houses are all building high-end houses due to an expected higher profit margin, which doesn't really help because most of the people who need houses now won't be able to afford them.
You're thinking of the suburbs. I live in the city. 98% of useful lots in my community have houses built on them and no one has a big back yard. There's open land to build houses pretty far out, but not within 30 minutes of any tech center. We have a huge issue with foreign nationals and speculators buying houses they either don't live in or spend little time in....because the wealthy have bought up all the middle class houses, all the middle class folks, including well-paid tech workers bought all the
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Wall Street Slum Lords are a massive problem (Score:5, Insightful)
My wife and I made a big mistake of renting from Invitation Homes. For those unfamiliar with this company, during the Great Recession several investment firms bought a huge number of single family houses. Which they've continued to do since then.
IH is reported to have over 80,000, yes 80,000 single family houses. There are a couple other companies like this.
While it's not a monopoly the sheer number of rentals they manage has driven up the cost to rent. Looking at comparable rentals many are now limited to either IH rentals or houses from the other companies.
The model has a number of high fees including a a furnace fee for cheap filters sent out every three months.
What really sucks is the maintenance service. We've had foundation problems that my wife became an utter pit bull with them. This week we're dealing with a main line problem. IH sent out a laborer with a scope, the guy was super nice and found two bellies. Well the equipment he had doesn't record the scope, he had to reschedule so his boss could bring the right one. Today the company contracted to do the work claimed to have arrived, two minutes later started the work, and less than five minutes completed the work.
The level of collusion between the Wall Street Slum Lords is massive. They've reduced the supply of single family houses, provide horrible customer service, and more.
I'm not a fan of government control but this is one area that something needs done. As far as I'm concerned there needs to be a limit to how many houses a company can own. I'm talking less than 100 and likely closer to 20.
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Actually we can thank single-use zoning and the anti-housing lobby for that. Landlords love NIMBYs! Them and anything else that prevents the free market from building more housing.
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The so-called "free market" is why prices are so high, not zoning.
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Increasing the supply of housing (including through zoning reforms) can only be good in terms of reducing rents.
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Here in the US, we have more vacancies than we have homeless people. That is to say, we don't have a supply problem. The problem is that the supply is being artificially restricted to drive up rent. Complaints about zoning are just a way for the people who are actually causing the problem to push the blame on local government. It's transparent nonsense.
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As far as I'm concerned there needs to be a limit to how many houses a company can own.
That number should be zero. A person can own a few residences. A business shouldn't. At all. That's what zoning laws should be for, among other things.
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There are zoning laws, just enforce that corporations can not profit from or use residential property. Done.
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Build enough houses and most of those problems will solve themselves. Heck, just announce that we're going to build housing until the price drops and all those real estate investors will shit themselves and sell sell sell.
Savers get more from their capital (Score:1)
Re: Savers get more from their capital (Score:2)
Or, maybe people realize they live in a community, and doing things like milking the absolute maximum rent money from tenants actually causes more long term harm rather than good. Yes, the corporation CAN find ways to maximize, the downside is that for all people rents get pushed up, and price out the lower end, who, as renters, donâ(TM)t really have elsewhere to go.
They work 2nd jobs, get more income, and inflation grows for all of us.
We have been tricked by the corporate oligarchs that itâ(TM)s
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What does it matter? (Score:2)
In real numbers, I was paying $2100
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what's going to happen?
Presumably they won't be allowed to do it any more. That protects future renters and may put a few more units onto the market.
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Pity the Poor Downtrodden Landlord (Score:2)
I think it is BS to suggest most landlords are struggling in today's housing market. Prices have been escalating at a pace that virtually guarantees they are making a profit. Their problem, as always, is cash. You either have to have cash on hand or the property needs to generate a stream of cash to pay for stuff. But figuring out how to cash flow the property is what they get paid for.
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Right, and they do that by charging rent that is high enough to cover costs, and high enough to cover future costs.
They do that by charging rents that produce the largest stream of revenue possible given the market. They can't charge more and very few choose to charge less. Costs matter only to the extent the competition has to pay the same costs. If you can keep your costs lower than the competition you sure as hell don't lower the rent.
I know plenty that are barely breaking even.
Most landlords are barely breaking even based on cash in/ cash out. If they can cash flow a higher mortgage they borrow more money to invest in more property. But in today's market resi
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Controversial Opinion: Small Landlords, Too (Score:2)
It's not just corporate landlords causing this problem and it's not just the philosophy of "increasing rent to meet market prices" BS excuse.
The biggest part of the problem is that we allow SO MANY homes that were BUILT to be OWNED to be used as rental investment properties. Again, I'm not just talking about businesses that buy multiple single-family homes (SFH). The problem includes people who innocently buy their first home, outgrow it, and instead of selling it to move into a bigger home, they make the o
Re: Controversial Opinion: Small Landlords, Too (Score:2)
Telling them itâ(TM)s bad is also irrelevant to them, as if they have the funds to buy a 2nd home, they arenâ(TM)t concerned if the impact is that others canâ(TM)t afford a reasonable home anymore - they got what they needed.
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Algorithms ALSO increase vacancy rates too (Score:2)
information (Score:2)
Economics is based on the "efficiency" of markets, which is best with perfect market information. That is all the software provides. By the same token, it can tell a landlord they are charging too much and the rental will sit empty for months if they don't lower the price. I wonder if the study took that into account.