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.
The accusation is that RealPage allows landlords to indirectly coordinate and fix prices across the industry. If this is true, then it is monopolistic price-fixing rather than supply and demand.
Ironically, regarding property vacancy, an earlier ProPublica article about RealPage has this to say:
> 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.
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.
> But are there other examples? Yes. One mind-blowing story from ProPublica that came out in 2022 was about landlord software sold by a firm called RealPage, which essentially told big landlords to raise rents by showing them “data RealPage gathers from clients, including private information on what nearby competitors charge.” There’s a quasi-consulting arrangement here too, as “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.”
> RealPage is now facing at least seven private antitrust class action suits, as lower output and higher prices are classic signs of monopoly power. What’s fascinating is that here again, an economist would look at these markets and see competition and multiple rivals renting out apartments, but they would miss that there’s a cartel, or rather a set of regional cartels coordinated by a software platform, operating to boost prices and margins.
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.
In fact, the lawsuits claim that RealPage shares "peer lists" with clients that tell them exactly who else is providing data to the company within a specific distance of their property.
This sounds like reassurance to a landlord that peers will mimic the same price moves. If true, I would call that price fixing.
This is not directly related but I really really really wish Realpage and landlords that used it to artificially increase rents pay a big price for their shenanigans.
The lawsuit accuses RealPages of not just being used for the collusion, but actually orchestrating the collusion. It claims RealPages went to the point of attempting to coordinate lease start/end timing across landlords to prevent oversupply, and having daily pricing calls with their customers where they pressure them not to deviate from the algorithmic suggested price. That's in addition to using non-public rental and pricing data from its customers to calculate the algorithmic price in the first place.
This is very interesting to me. Even if landlords had no interest in colluding, if they all use the same software to decide on prices, it seems like it could amount to the same thing.
In reality, the case against the landlords and RealPage seems stronger than that, but I find even the theoretical case interesting.
> On a summer day last year, a group of real estate tech executives gathered at a conference hall in Nashville to boast about one of their company’s signature products: software that uses a mysterious algorithm to help landlords push the highest possible rents on tenants.
> “Never before have we seen these numbers,” said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company’s services. Turning to his colleague, Parsons asked: What role had the software played?
> “I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.”
> Camden’s turnover rates increased about 15 percentage points in 2006 after it implemented YieldStar, Campo, the company’s CEO, told a trade publication a few years later. But that wasn’t a problem for the firm: Despite having to replace more renters, its revenue grew by 7.4%.
The article notes that the software encourages landlords to maximize profitability by raising rents and reducing supply.
> RealPage claims its software will increase revenue and decrease vacancies. But at times the company has appeared to urge apartment owners and managers to reduce supply while increasing price.
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.
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.
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.
I'm sure a decent chunk of HN's population has lived or lives in properties that are or were using RealPage.
Rant/Anecdote ahead:
We have recently decided to rent from a house from a private landlord after equity (a RealPage customer), "offered" us a 15% rent hike which they considered "reasonable" after massively cutting staff, service, security & amenities during covid.
Practically every other building in the area (downtown Redmond, WA) has increased prices in unison so there is basically 0 competition.
These companies have turned areas they operate into upscale meat grinders that lure you with a "welcome" price only to systematically hike up your rent way beyond inflation. To slowly push you out if your salary doesn't grow faster to equal to their hikes.
Many of our friends have similar experiences.
Imo corporate landlords need to be heavily regulated and need to be broken up.
I saw RealPage's crappy rent-jacking-up software so you don't have to - https://news.ycombinator.com/item?id=34926683 - Feb 2023 (403 comments)
DOJ will examine whether RealPage helped landlords coordinate rent increases - https://news.ycombinator.com/item?id=33744136 - Nov 2022 (123 comments)
RealPage and landlords illegally created a 'cartel' to set prices, lawsuit says - https://news.ycombinator.com/item?id=33633541 - Nov 2022 (3 comments)
Lawsuit filed against rent-setting software RealPage - https://news.ycombinator.com/item?id=33317414 - Oct 2022 (50 comments)
Rent going up? One company’s algorithm could be why - https://news.ycombinator.com/item?id=33224502 - Oct 2022 (279 comments)
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