Oh wow, you're absolutely right. Somehow I missed that from the OP:
> The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit.
> If a subset of companies use the exact same algorithm for price discovery, is there a form of price-fixing? This is the key question being argued.
No it's not. You're missing a critical bit here. The argument is that there's actual enforcement of the price the software suggests, and at that point it really seems completely irrelevant whether the enforced price was determined by an algorithm or a person:
"The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit."
> The complaint, filed earlier today by Attorney General Brian Schwalb, focuses on the multifamily landlords' use of software from Texas-based firm RealPage, which suggests rental prices based on a pricing algorithm. Key to those models, according to the suit, is the data fed in from the landlords and the pressure RealPage puts on them to stick to the code-derived rental rates.
It's a complaint. Nothing was filed yet. And it looks like they used a pricing algo to suggest a price? Im suggested a price when I sell on eBay, or StubHub or Facebook marketplace, or pretty much anywhere. I don't know how they "pressured" landlords but maybe a box like "we suggest market price to maximize returns!" eBay similarly warns me when I stray too far away. The pricing algo is actually a fabulous service.
And if they're a property manager then their job is to find the market price and rent out apartments at the behest of landlords. I really don't see the technical issue here. You can say collude and conspire, but what does that mean in technical terms. And what does "being subject to" the algo mean? Exposed?
>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.
> you Maximised income at about a 15% vacancy rate. So in an unregulated market driven situation you would be leaving money on the table if you did not keep reaching prices until you priced some people out.
That is perhaps the motive of massive collusion in rental markets around the US: A company named RealPage sold software to landlords that coordinated the rents they charged in order to maximize income, and the outcome was high rents, of course, and many empty apartments. (Essentially the landlords hired RealPage to organize their collusion.)
Title adjusted from "We Found That Landlords Could Be Using Algorithms to Fix Rent Prices. Now Lawmakers Want to Make the Practice Illegal." due to title character limits.
RealPage is an aggressive, powerful organization, the lawsuit alledges:
> RealPage's software has set the rent at more than 30% of apartments in multifamily buildings in D.C. and 60% of units in large multifamily buildings, per the lawsuit. The percentages are even higher for the broader D.C. metro area.
> The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit.
And nationwide:
> There were 49.5 million rental units in the U.S. as of 2022, according to data from the U.S. Department of Housing and Urban Development.
> RealPage in 2020 said its software served 19.7 million rental units of all types in the U.S. — more than a third of all rental units nationwide.
> [RealPage's] algorithm is based on pricing data from its own clients, prompting some experts to speculate that the company effectively provides a way for big landlords to collude and fix prices.
This seems like it would only be an effective form of collusion if everyone or almost everyone in the same area used, and therefore fed data into, RealPage. If it's only a small slice of a given city's rentals it seems like it would be much less effective.
Perhaps the real way to fix this is regulation requiring all landlords to publish their rent pricing data in an open and accessible way. I don't know if such data exists or not in the United States, or even here in Finland, but I would be absolutely fascinated to see it.
EDIT: Bloomberg Terminal users, does your magic know-everything machine have this kind of data?
You're not going to like this answer, but...the market does.
The point is that no software has to power to force tenants to pay higher than market rents.
edit to add:
> In the case of YieldStar it means that tenants cannot fairly negotiate because they don't know what a reasonable price is.
If that's the case, then the landlords could save the money they're spending on YieldStar and just set the high prices already. They could use their own proprietary "I want more money" algorithm, and the tenant would have no choice but to pay whatever number the landlord popped out of their head.
What's described here is significantly worse, in that it's not just landlords deciding to leave things vacant instead of lowering lease prices, it's a third party software that's coming in and telling a large number of landlords across a market what they're allowed to charge.
This software is collusion, and anyone using it today should be penalized. I don’t care what excuse they have, it’s clear to someone with half a brain (most landlords have at least half) should realize software that fixes prices for you based on local demand is going to be collusion. It’s pretty clear how that stuff works, the only unclear thing is if there is a loophole or judge which will let the landlords off in favor of the zombie economy over actual humans.
These two bullet points from the article seem to indicate that RealPage covers a large swath of the market, and that compliance is mandatory.
>The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit.
> RealPage's software has set the rent at more than 30% of apartments in multifamily buildings in D.C. and 60% of units in large multifamily buildings, per the lawsuit. The percentages are even higher for the broader D.C. metro area.
> They are looking at what competitors are charging before setting their own prices. That should be illegal?
That practice isn't what's illegal. What people are having issues with is that RealPage which is used by a large number of landlords (from private landlords to megacorps), recommends prices to the landlords when it comes to marketing a unit. This data is pulled from other rentals on the market and what other RealPage users are charging. A majority of the time, landlords just use that number to advertise. That's why some apartment communities have prices that change daily, since RealPage changes their numbers daily. As such, this is a roundabout way of price fixing as RealPage is in a position that artificially raises rents across a wide location range.
This isn't a case of companies looking at what other companies charge for the same service. This is one company that's comparing their pricing against themselves. This results in cases such as a primarily affordable apartment community can see rents shoot up $300-$400/month all because a luxury apartment opened on the other side of town and both management companies just so happen to use RealPage.
It's removing relevant comparisons from the actual pricing schedule, which in some cases can be seen as price fixing as the prices no longer reflect the actual market.
You're being facetious right?
A suit last month alleges just that .
https://arstechnica.com/tech-policy/2023/11/14-big-landlords...
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