[HN Gopher] Price fixing by algorithm is still price fixing
___________________________________________________________________
Price fixing by algorithm is still price fixing
Author : nabla9
Score : 794 points
Date : 2024-03-02 21:10 UTC (1 days ago)
(HTM) web link (www.ftc.gov)
(TXT) w3m dump (www.ftc.gov)
| csa wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| Totally agreed. I'm unclear whether eliminating this (or
| even all) mechanism for price fixing on rent will cause
| prices to drop.
| indecisive_user wrote:
| 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.
| josh-sematic wrote:
| 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 wrote:
| The former (you can't collude with a competitor to use the same
| algorithm to set prices)
| lazide wrote:
| How can you collude with someone you don't communicate with
| in any way?
| dkjaudyeqooe wrote:
| By using a third party software or service that sets a
| price, knowing that your competitors are doing the same.
| SoftTalker wrote:
| 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?
| dkjaudyeqooe wrote:
| 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.
| dugite-code wrote:
| 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.
| makeitdouble wrote:
| 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.
| fragmede wrote:
| "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 wrote:
| 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.
| lodovic wrote:
| Everyone is colluding with the middle man
| bobthepanda wrote:
| 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 wrote:
| 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
| advisedwang wrote:
| 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 wrote:
| What is the definition of price fixing in this world?
| makeitdouble wrote:
| Reducing consumer choice by artificially setting sinilar
| prices as comptitors.
| ClumsyPilot wrote:
| Taking competition our from the market mechanism
| StewardMcOy wrote:
| 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.
| dragonwriter wrote:
| 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 SS 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.
| rocqua wrote:
| 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.
| kirse wrote:
| 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.
| tpmoney wrote:
| 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 wrote:
| _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 wrote:
| 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 wrote:
| This is great and really well organized, thanks for
| sharing!
| iudusuux wrote:
| 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.
| Ekaros wrote:
| 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 wrote:
| I'd expect the cost of cars, which is has become tethered to
| 'monthly payment' instead of actual cost.
| sroussey wrote:
| Insurance is based on the cars you may hit that are not your
| own. Prices have been going up. So not surprised.
| seanmcdirmid wrote:
| Liability insurance is based on other people's cars.
| Comprehensive and collision is based on your own car.
| xapata wrote:
| Liability is more about medical costs, no? If it were
| bounded to vehicle cost, I'd self-insure.
| seanmcdirmid wrote:
| 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 wrote:
| 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 wrote:
| The number of claims over $100k are much less frequent,
| which is why it is cheaper to raise your cap.
| Marsymars wrote:
| 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 wrote:
| 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.
| Scoundreller wrote:
| > 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 wrote:
| 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 wrote:
| > 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 wrote:
| That's called moral hazard.
| vkou wrote:
| 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.))
| eiderman wrote:
| 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 wrote:
| 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.
| kelnos wrote:
| 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 wrote:
| > 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.
| jrockway wrote:
| 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.
| SoftTalker wrote:
| 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.
| dylan604 wrote:
| The price to repair cars are also going up which is making
| the payout claims cutting into profit margins. So the
| solution is obvious
| akira2501 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| Used cars went up in value because new cars went up in
| value. There's no sudden interest in driving used.
| akira2501 wrote:
| 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.
| ensignavenger wrote:
| As another anecdote, I get very different quotes for auto
| insurance from different companies.
| mschuster91 wrote:
| > 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 wrote:
| > 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 wrote:
| 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.
| dools wrote:
| 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.
| mint2 wrote:
| 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 wrote:
| > 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?
| nostrademons wrote:
| 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.
| spencerchubb wrote:
| 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 wrote:
| > 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 wrote:
| > Good luck setting up a system that can only discriminate
| using some signals and not others.
|
| This is the current system.
| thwarted wrote:
| And an AI based system wouldn't correct that, it would
| only make it even more opaque.
| jandrese wrote:
| The requirement isn't to avoid discrimination, it is to
| not get caught. That somewhat opaque "AI" layer is great
| for that.
| CydeWeys wrote:
| 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.
| jandrese wrote:
| It's one thing for people to know what you are doing,
| it's another to prove it in a court of law, or even to
| get law enforcement interested in the first place.
| tomrod wrote:
| Nah, there are some nice metrics to capture disparate
| impact between categories. Check out Microsoft's
| fairlearn library some time.
| BlueTemplar wrote:
| 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.)
| thwarted wrote:
| _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.
| tomrod wrote:
| > 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.
| nerdponx wrote:
| 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.
| wolverine876 wrote:
| I'm not sure what that means: How does that explain the
| widespread and large price increases, and the GP's
| experience?
| phonon wrote:
| > 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.
| ejb999 wrote:
| 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 wrote:
| > 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.
| timy2shoes wrote:
| > 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 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| Your interpretation of what I posted is correct. My
| apologies for the lack of clarity. Comment has been
| edited.
| SoftTalker wrote:
| No, because injury claims also include lost income,
| compensation for disability, pain and suffering, etc. not
| just medical expenses.
| morkalork wrote:
| 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.
| maxboone wrote:
| 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 EUR 7.5 million for personal
| injury, EUR 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 wrote:
| This is interesting to me, an American unfamiliar with
| European systems.
|
| > Required insurance covers EUR 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?
| maxboone wrote:
| 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.
| InsomniacL wrote:
| 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 wrote:
| I believe the phrase of art for this is value of
| statistical life.
| orwin wrote:
| 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 200EUR 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).
| lozenge wrote:
| 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 wrote:
| Car insurance in Europe averages ~1050 USD/year, US
| averages edit: $2,545 USD/year that's a huge difference
| IMO.
| maxboone wrote:
| Even when you put it next to the average (or better,
| modal) wages?
| tomrod wrote:
| 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 wrote:
| 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 wrote:
| The other comment thread walked through the UK example as
| well. American insurance is over priced.
| Retric wrote:
| 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 (PS34,963/year) vs US is at 70,248.63.
|
| Average car insurance in England is 710.06 USD
| (PS561/year) vs 2,545 USD in United States.
| Retric wrote:
| 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...
| ejb999 wrote:
| Yikes! That is quite expensive compared to what I pay.
| MaKey wrote:
| How come car insurance is so expensive in the US? In Europe
| it's vastly cheaper and the policies themselves are much
| better.
| Retric wrote:
| 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.
| lozenge wrote:
| Well traffic deaths per capita are about double in the US
| so that probably carries over to other insurance-
| triggering incidents.
| orwin wrote:
| I think the average cost per year per person in my country is
| 1500EUR, so it is actually way cheaper than what i expected
| for the US.
| vkou wrote:
| 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 wrote:
| 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 wrote:
| 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.
| switch007 wrote:
| 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 wrote:
| 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.
| gzer0 wrote:
| 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 wrote:
| Is there a cheaper insurance company then these two?
| dclowd9901 wrote:
| 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.
| fefefeffffeef wrote:
| 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.
| kelnos wrote:
| 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.
| CydeWeys wrote:
| 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?
| nerdponx wrote:
| 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.
| phonon wrote:
| 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
| standardUser wrote:
| > 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.
| 58028641 wrote:
| 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 wrote:
| 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.
| malermeister wrote:
| 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 wrote:
| 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 wrote:
| What residency control does Vienna have?
| thisgoesnowhere wrote:
| 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 wrote:
| 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 wrote:
| Finally someone who has thought through the problem and
| come out with the right solution. Great stuff
| standardUser wrote:
| "Rent control" can do any numbers of thing - it really
| depends on the specific policies.
| ruuda wrote:
| Increasing supply decreases prices globally, but increases
| them locally: https://www.astralcodexten.com/p/change-my-
| mind-density-incr...
| bombcar wrote:
| 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 wrote:
| Yes in the same way that social welfare rewards people lucky
| enough to be born in your country.
| Ekaros wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| Ekaros wrote:
| 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...
| bombcar wrote:
| 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 wrote:
| 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).
| standardUser wrote:
| I think families should have as much time as possible to
| handle the significant costs and disruptions associated with
| moving homes.
| justinclift wrote:
| Why "inflation+2%" rather than just inflation?
| Ekaros wrote:
| 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.
| gopher_space wrote:
| 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.
| vkou wrote:
| 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.
| Workaccount2 wrote:
| 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.
| standardUser wrote:
| Did you read my comment? It is literally about how "strict
| rent increase laws" are not the solution.
| arcticbull wrote:
| While true, if supply and demand are allowed to meet
| through new construction you won't need rent stabilization
| laws.
| CPLX wrote:
| 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.
| kredd wrote:
| 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.
| Aurornis wrote:
| Your component proposed a set of rent controls (12 month
| notices, limited yearly raises) that are basically
| equivalent to rent control in many locations.
| CPLX wrote:
| 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.
| r00fus wrote:
| The problem is speculation by foreign money or wealthy
| people.
|
| This is fixable by taxation or by limiting corporate
| ownership of homes.
| vkou wrote:
| 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.
| moreofthis wrote:
| 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.
| janalsncm wrote:
| 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 wrote:
| > 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 wrote:
| Have you looked at what's happening to housing prices in
| resort towns lately?
| JackMorgan wrote:
| No what is happening to them?
| janalsncm wrote:
| > 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 wrote:
| 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.
| scotty79 wrote:
| > 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.
| wolverine876 wrote:
| > 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).
| stefan_ wrote:
| 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".
| NovemberWhiskey wrote:
| Everything is up 20% since 2020; but lower-income wages are up
| more, FWIW.
| pizzafeelsright wrote:
| 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.
| patrickmay wrote:
| 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 wrote:
| > 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 wrote:
| 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 wrote:
| 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.
| akira2501 wrote:
| 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.
| jonas21 wrote:
| 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.
| Aurornis wrote:
| > 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 wrote:
| > 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.
| devbent wrote:
| 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 wrote:
| Renting a HOA'd unit has to be its own hell.
| Marsymars wrote:
| It trivially can't do that forever though, or the entirety of
| the world's economy will consist of fees to your HOA.
| Marsymars wrote:
| 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.
| ilikehurdles wrote:
| > 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 wrote:
| 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 wrote:
| 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.
| ghaff wrote:
| 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.
| willis936 wrote:
| 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.
| ilikehurdles wrote:
| 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 wrote:
| 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 wrote:
| > 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.
| usui wrote:
| > 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 wrote:
| 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 wrote:
| 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.
| SilasX wrote:
| Always?
| trimethylpurine wrote:
| _> IMHO_
|
| As opposed to your dishonest opinion?
| trimethylpurine wrote:
| 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'?"_
| __s wrote:
| TBF the usage is not saying it's legal online. They're saying
| the loophole is imaginary, existing in the minds of the
| colluders
| foooorsyth wrote:
| 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?
| quasse wrote:
| 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.
| apendleton wrote:
| 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 wrote:
| 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 wrote:
| But why wouldn't they just got a couple percent under the
| price, and fill all their units?
|
| Vacancies kill returns.
| dugite-code wrote:
| > Vacancies kill returns.
|
| Unless you can guarantee prices will rise, then you just
| recoup lost revenue when it's next occupied.
| lazide wrote:
| It takes a LOT of rent increase (in a short period of
| time) to make up for even a month or two of lost rent.
| Literally one month of rent lost (due to vacancy) would
| require all the following months rent to be 8.5%ish
| higher to make up for it if you wanted to recoup within
| the next year.
|
| Vacancies kill returns, because you aren't actually
| getting paid - at all - for the thing that you make money
| off of.
|
| Long term (very long term) more modest improvements could
| of course pay off - BUT, that shortly would require you
| be way outside the market rates if you had many
| vacancies, or doing completely impossible things like
| 100%+ increases in rent y/y to not lose money.
|
| Now if you're able to corner the market, maybe. But good
| luck actually successfully doing that, since people are
| generally able to move, live with relatives, live in RVs,
| live in tent encampments, etc. if you try.
| InitialBP wrote:
| 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.
| lazide wrote:
| My understanding is the issue is a different one - these
| big corporate places can't reduce their rents because if
| they do, their 'stats' (claimed value due to stated
| rental prices x units) get bad, and they're all so highly
| leveraged they potentially lose their financing and their
| house of cards will implode.
|
| In some cases, they'll literally default if the number
| goes below a certain value. They already are in deep
| trouble with the cost of financing going up (3x in many
| cases) due to fed rate increases, as commercial loans
| aren't 30 year fixed like typical residential ones are.
| Think 5-7 year variable rate, or weirder, and often 3-5%
| higher than the nominal mortgage rate as commercial loans
| are riskier (not gov't backed).
|
| Nobody (except individuals, maybe) wants the system to
| implode right now, including lenders, as everyone is
| hoping for a post-covid boom that will get everyone out
| of trouble.
|
| It's also why they give so many 'incentives' in the form
| of free months rent on signing. They still get to claim
| the higher rent on their stats (keeping the overall
| nominal value of the complex high), put the incentive
| under a marketing cost, and voila.
|
| Normally, these financing deals do 'gimmes' for high
| vacancy rates/ignore them because typically that is
| temporary - it impacts cash flow, but not 'value'.
| Everyone has gotten used to ignoring cash flow (to their
| detriment IMO) over the the last many years, and has been
| basing their portfolio on 'value'.
|
| The units sitting empty thing 'works' until the cashflow
| becomes an actual problem, at which point they are
| bankrupt and the whole house of cards implodes anyway.
| But wil-e-coyote wise, that may never actually happen,
| which is why they keep doing it.
|
| Personally, I'd be shorting all these ETFs if I was bored
| and had enough cash sitting around.
| Rapzid wrote:
| In the referenced case a management company was
| pressuring/forcing participants to go with the
| recommended prices.
| lazide wrote:
| Management companies work for owners? Not the other way
| around.
|
| How would a management company force an owner to do
| anything they didn't want to do?
| bsder wrote:
| > 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.
| lazide wrote:
| That is my understanding as well - but that is a
| completely different cause than what is being claimed.
|
| Notably, while individual landlords are much more cash
| flow sensitive (as in per-unit issues), even big
| companies will have issues if these problems happen 'at
| scale'. And those problems will be monstrously large when
| they happen.
|
| Occupancy taxes will just make the bubble pop that no
| ones wants to pop, since the issue is dropping rents will
| trigger defaults due to financing issues because
| financing is still more expensive than it was, and that
| isn't going to change anytime soon. And said taxes would
| trigger high cashflow costs, which would just force
| companies into bankruptcy ASAP.
|
| Same with the bond issues that took out a bunch of banks
| last year, and still are causing structural bad debt
| issues everyone is trying to ignore right now.
| bsder wrote:
| > And said taxes would trigger high cashflow costs, which
| would just force companies into bankruptcy ASAP.
|
| And _that 's fine_.
|
| Those who didn't stick their necks out should be able to
| buy the distressed assets at discount and force the
| financing agreements to unwind. Real estate doesn't go
| away. People still want houses. Businesses making
| products don't go away. Places to work--maybe not so
| much.
|
| Unless you allow bad businesses to go bankrupt, you'll
| wind up like China.
|
| Vacancy taxes force that decision much sooner-- _before_
| everything goes belly up at scale. The landlord has to
| decide to rent lower or sell the property.
| akira2501 wrote:
| 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 wrote:
| 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.
| justinclift wrote:
| Weirdly, the FTC site seems offline: NOTICE:
| The FTC website is currently unavailable. Thank you for your
| patience while we work to restore service.
| thelastgallon wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| > 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 wrote:
| 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.
| dkjaudyeqooe wrote:
| 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 wrote:
| 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.
| samatman wrote:
| 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?
| dkjaudyeqooe wrote:
| 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 wrote:
| 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 wrote:
| 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.
| samatman wrote:
| Why isn't that clearly stated in the FTC brief? That's a
| hell of an absence of evidence, under the circumstances.
| If there's a smoking gun, why leave it out?
| cogman10 wrote:
| 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 wrote:
| > 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.
| FireBeyond wrote:
| Consequences involve being kicked off the service with no
| refund for the (significant) fees.
| Aunche wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| > 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 wrote:
| 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 wrote:
| > 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!
| tsimionescu wrote:
| 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 wrote:
| 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 wrote:
| > 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 wrote:
| 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 wrote:
| Can you link to info on that feature of the software?
| koliber wrote:
| It might not remove the possibility of negotiation. If it
| reduces the likelihood of negotiation, the impact is
| similar.
| vineyardmike wrote:
| 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 wrote:
| 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.
| jprete wrote:
| If holding back 20% of the units in every building drives
| up prices by 30% - this is completely possible in
| something like real estate where supply is so inflexible
| - then each individual landlord might have a motivation
| to defect, but the group as a whole has a reason to
| cooperate. The purpose of the software is to give the
| coordinators visibility into who's cooperating. Note that
| the TOS requires a landlord to always use the algorithm's
| pricing decision, including leaving units empty, and
| requires reporting back on every lease transaction so the
| company can measure compliance.
|
| This really is collusion as a service.
| nerdponx wrote:
| 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.
| kllrnohj wrote:
| > 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 wrote:
| Sounds like they're determining their own price with the
| technology that's available.
| kllrnohj wrote:
| 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 wrote:
| 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.
| trimethylpurine wrote:
| 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.
| colechristensen wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| vineyardmike wrote:
| > 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 wrote:
| 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 wrote:
| > 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 wrote:
| > 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 wrote:
| 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".
| AnthonyMouse wrote:
| > What you don't know, and is a closely guarded secret,
| is how Walmart arrived at that price.
|
| This is often not that much of a secret either. In many
| cases it's as simple as: Look at what competitors are
| charging, set your price the same or slightly lower, and
| if that price isn't profitable then don't carry it.
|
| Which is why concentrated markets are basically as bad as
| a monopoly. If all you have is Walmart and Whole Foods
| then Walmart can raise prices, Whole Foods sees this and
| raises theirs too, and then they both leave it there
| because that's better for both of them than the lower
| price. Doubling their margins is more profitable than
| increasing their market share from 50% to 75%. Tripling
| their sales isn't on the table because they each started
| with 50% and you can't have 150% of the market.
|
| Whereas if there are a hundred stores, even if 80 of them
| try to match Walmart's price increase, 20 of them notice
| that they now _can_ triple their sales or more by keeping
| the lower price, and that 's more profitable than
| doubling their margins. At which point others get tired
| of losing most of their sales and lower their prices
| again.
|
| And the latter is the kind of market Walmart actually
| operates in, which is why their marketing slogan is "low
| prices" and not "it's for your own good".
|
| > 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).
|
| That's exactly when it's a problem, because they all have
| the same incentive: Let the members of the cartel
| increase the market price by withholding their units,
| while renting out all of yours. And then it's not just
| one landlord doing it because the only ones _not_ doing
| it are "selfless" idiots who could be making more money
| by defecting against the cartel.
| casualscience wrote:
| 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.
| koliber wrote:
| 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 wrote:
| Especially when it uses _material non-public information_
| in order to do so.
| trogdor wrote:
| 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.
| Geisterde wrote:
| 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 wrote:
| Yep, especially with housing. You just build more homes
| quickly, right across the street from the overpriced
| ones, and rent them for cheaper.
| tomn wrote:
| "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.
| projektfu wrote:
| Missing sarcasm tag on building homes quickly.
| nottorp wrote:
| Also on right across from the overpriced ones.
|
| Should have been obvious...
| Geisterde wrote:
| There is property for sale in probably every corner of
| the world, you dont need to build anything.
| blactuary wrote:
| This is laughable. Every major metro area in the US is in
| the midst of a crisis of lack of housing supply.
| tomn wrote:
| Oops. I've seen worse free-market capitalist opinions
| held earnestly on HN, so it's hard to tell...
| nottorp wrote:
| Yeah, the one i replied to for example :)
| zenapollo wrote:
| 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.
| jkoudys wrote:
| 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."
| soerxpso wrote:
| I see how this is illegal when it's using a single
| centralized platform that everyone implicitly agrees on.
| However, I have a hypothetical that I'm curious about:
|
| Individually, without speaking, every landlord decides that
| it's in their best interest to charge the highest (per
| square foot) price that a nearby property is charging. They
| also all individually understand that if they leave units
| vacant instead of undercutting eachother, the market impact
| in favor of their interests will be sufficiently positive
| to justify the lost immediate revenue, and they trust
| (blindly) that no landlords will defect from this
| prisoner's dilemma. There's no communication at all; they
| all just understand game theory and have blind trust in
| their fellow landlords.
|
| This would have the exact same material impact on renters.
| The only difference is that it's slightly harder to pull
| off. Is it illegal, and should it be illegal?
| aaomidi wrote:
| 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 wrote:
| What if there are multiple vendors selling algorithms? Open
| source bots doing this? How many bots is a collusion?
| polygamous_bat wrote:
| Even if you're talking to your next door landlord and
| coming up with a joint price, it's collusion.
| dragonwriter wrote:
| > 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.
| dkjaudyeqooe wrote:
| 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 wrote:
| What amazed me was that sometimes the recommendation from
| the software was to not lease a unit to anyone.
| bluGill wrote:
| 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 wrote:
| 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.
| letmeinhere wrote:
| 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 wrote:
| > That secretive information sharing is the basis of the
| whole scheme.
|
| can you recommend a link that this describes this in
| detail?
| karmajunkie wrote:
| the link at the top of this thread does so.
| jessriedel wrote:
| It does not
| colechristensen wrote:
| https://www.propublica.org/article/doj-backs-tenants-
| price-f...
|
| Contains links to an investigation and lawsuits where you
| can read DOJ complaints
| jessriedel wrote:
| Right, but I'm asking a more specific question: what is
| the secret info that they are sharing? Is it just the
| rents?
| letmeinhere wrote:
| The propublica article linked at the beginning of this
| thread is how I learned about these parasites. Definitely
| recommend.
|
| https://www.propublica.org/article/yieldstar-rent-
| increase-r...
| refurb wrote:
| 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?
| trifurcate wrote:
| > 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.
| olliej wrote:
| 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 wrote:
| 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 wrote:
| Do you have some papers to back up the claims that price
| fixing doesn't work?
| Geisterde wrote:
| Sure, I would recommend you start with "basic economics",
| 5th edition, by thomas sowell.
| ethbr1 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| I am not finding the phrase price fixing anywhere in that
| book. Am I holding it wrong?
| Geisterde wrote:
| 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.
| jrflowers wrote:
| You make an interesting point. While the concept is never
| introduced in the book, the sum total of the information
| of the book is that price fixing doesn't work.
|
| How do I square that with the lesson that I learned from
| the Bible? While price fixing is not mentioned in it it
| is pretty clear that it says that price fixing works
| blactuary wrote:
| 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 wrote:
| > 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?
| jessriedel wrote:
| 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 wrote:
| >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.
| hinkley wrote:
| Another thing the could do with this information is, if
| one of their customers has to take a bunch of units off
| the market to refurbish/abate them, it can instantly
| increase all of the prices for their other customers
| because it knows the supply just changed.
| jessriedel wrote:
| I mean, tenants share this info all the time. I'm not
| aware of them doing it really systematically anywhere,
| but I doubt there would be objections if they did.
| Likewise, no one objects when employees share salary
| info, anonymously or otherwise, even though employees
| usually treat this as confidential info.
| stackskipton wrote:
| And? This is companies with perfect set of data vs some
| theory crafted world where everyone individually did it
| perfectly?
| letmeinhere wrote:
| Yes, actual rents of all units under management,
| specifics about what properties are vacant, when
| properties are available to go up for lease renewal or
| open market, and I imagine also detail on deferred
| maintenance, to aid in deciding when to renovate which
| units. Would not be surprised if they take demographic
| data too. The more you share with RealPage, the better
| the recommendations you receive, and the higher your
| unearned income.
|
| And no, these are not routinely shared publicly.
| Landlords are _allowed_ to open their books, but for-
| profit businesses generally do not do so without specific
| incentive, because it is more profitable to keep trade
| secrets. Even if they wanted to, how would they do so? I
| 'm not aware of a nonprofit data hub for them to dump all
| of this for public consumption (and if I don't know, I'm
| confident random slumlords in Cincinnati also don't).
| Maybe RealPage can make a free and open one if they are
| so committed to just making good honest tools for well-
| informed market participants.
|
| The publicly scrapable data is: advertisements to
| prospective new tenants for the buildings who have
| tenants that recently announced their intent to move (or
| were evicted). They frequently won't even have specific
| unit numbers attached to them. They only have to be
| accurate enough to solicit inquiries and not get the
| landlord sued, an extremely low bar, especially in a hot
| market (where RealPage reaps its profits). The data
| availability is night and day.
| 1vuio0pswjnm7 wrote:
| 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.can
| d.4...
|
| Boelens v RealPage (WD Washington)
|
| https://ia801504.us.archive.org/27/items/gov.uscourts.waw
| d.3...
|
| Cherry v RealPage (WD Washington)
|
| https://ia601403.us.archive.org/33/items/gov.uscourts.waw
| d.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.gan
| d.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.can
| d.4...
|
| Marchetti v RealPage (SD Florida)
|
| https://ia801602.us.archive.org/27/items/gov.uscourts.fls
| d.6...
|
| Morgan v RealPage (WD Washington)
|
| https://ia804709.us.archive.org/25/items/gov.uscourts.waw
| d.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.fls
| d.6...
|
| Schmidig v RealPage (ED California)
|
| https://ia601603.us.archive.org/30/items/gov.uscourts.cae
| d.4...
|
| Silverman v RealPage (SD New York)
|
| https://ia601506.us.archive.org/19/items/gov.uscourts.nys
| d.5...
|
| White v RealPage (Massachusetts)
|
| https://ia601603.us.archive.org/30/items/gov.uscourts.cae
| d.4...
|
| Duffy v Yardi Systems (WD Washington)
|
| https://ia800508.us.archive.org/30/items/gov.uscourts.waw
| d.3...
|
| Chirino v Yardi Systems (ED Virginia)
|
| https://ia801307.us.archive.org/3/items/gov.uscourts.vaed
| .54...
| 1vuio0pswjnm7 wrote:
| Correction:
|
| White v RealPage (Massachusetts)
|
| https://ia801500.us.archive.org/14/items/gov.uscourts.mad
| .25...
| jessriedel wrote:
| Can you describe what secret info is being shared in
| those cases? Is it just the rents people are paying?
| Terr_ wrote:
| > 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.
| turquoisevar wrote:
| 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 wrote:
| 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 wrote:
| > 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 wrote:
| 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 wrote:
| > - 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.
| HumblyTossed wrote:
| > 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?
| pylua wrote:
| 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
| zymhan wrote:
| > Why would I care what anyone else is charging?
|
| Then you probably shouldn't be participating in this
| discussion.
| bikezen wrote:
| 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 wrote:
| 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 wrote:
| 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.
| refurb wrote:
| 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.
| closeparen wrote:
| 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 wrote:
| 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.
| tsimionescu wrote:
| 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 wrote:
| Contracts often forbid sub-renting.
| lowbloodsugar wrote:
| 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.
| bluGill wrote:
| If you own 100 houses to rent it is already known you
| should have a few empty at all times.
| lozenge wrote:
| 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).
| FireBeyond wrote:
| 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.
| ThrustVectoring wrote:
| 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.
| closeparen wrote:
| 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 wrote:
| 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.
| tsimionescu wrote:
| 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 wrote:
| 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.
| HDThoreaun wrote:
| > 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.
| nkrisc wrote:
| 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 wrote:
| So the law is an AI model :-)
| hnburnsy wrote:
| Prices on rental search sites are wishes not actually leased
| costs and would be missing things like the term, pets, and
| incentives.
| FireBeyond wrote:
| 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).
| bostik wrote:
| 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 wrote:
| 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.
| hinkley wrote:
| But we are disrupting markets! Doesn't that make us trendy
| and forward thinking??
| mu53 wrote:
| 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.
| cyanydeez wrote:
| it was illegal. making a mechanical turk to kill people
| doesn't free the turk from a crime.
| kevin_thibedeau wrote:
| 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.
| MagicMoonlight wrote:
| 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.
| ametrau wrote:
| You can't be part of a price fixing cartel no.
| dkjaudyeqooe wrote:
| > 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 wrote:
| Why is that shocking? It's not just laundering the price
| fixing, it's laundering the guilt.
| dkjaudyeqooe wrote:
| Shocking that he figures that the right amount of empathy
| is zero (see toomuchtodo's comment).
| ClumsyPilot wrote:
| Seems fairly typical of software developers drunk on cool
| aid
| toomuchtodo wrote:
| The developer in this case is the sociopath. Not uncommon.
| Espressosaurus wrote:
| It's a banality of evil situation for the developer and
| their entire chain of command.
| voidfunc wrote:
| This is shocking? You're kidding right?
| refurb wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| > 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 wrote:
| 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_.
| FireBeyond wrote:
| > 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 wrote:
| This is blatant flouting of the law in confidence that the
| government will collude. Elections have consequences.
| Guest42 wrote:
| The usage of this algorithm prevents the lowering of prices by
| simply building more units as the occupancy rate can simply be
| adjusted.
| anomaloustho wrote:
| 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 wrote:
| 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?
| EasyMark wrote:
| It's amazing that they are providing tons and tons of public
| admissions on how they are colluding together to make an in
| "quacks like a duck" monopoly. I personally think this should
| be codified in law rather than court precedence, since that
| doesn't seem to mean much in the US "justice" system any
| longer.
| lifeisstillgood wrote:
| 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 wrote:
| 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. PP 227,
| 380.] RealPage then feeds "this data into a common algorithm."
| [Student Compl. P 5;] [Multifamily Compl. P 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. P 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. PP 17-20, 261-86.] As a
| result, landlords using RealPage adopt RealPage's
| recommendations 80-90% of the time. [Id. P 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 wrote:
| That sounds like a dark pool for the rental market.
| kristjansson wrote:
| 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 wrote:
| 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 wrote:
| 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.
| chefandy wrote:
| It does come across as a bit glib, but I empathize with the
| author.
|
| I worked in legal higher-ed for a long time; I have
| absolutely no legal education, but my job involved reading
| lots of writing about the law, both for expert and non-
| expert audiences. Accurately conveying the importance of a
| topic without getting into the nitty gritty or running into
| collisions with colloquial and legal word usage is tough.
| Even that one paragraph I quoted had like 6 citations or
| something, and that's not just to satisfy technical
| requirements. There's just so much subtlety behind even
| very common words like _may, must, shall, and will_ when
| used in a legal context that it seems like context
| switching is tough. The word count seems to grow
| logarithmically with the factual and conceptual detail, and
| even then you 're leaving out a lot of padding beneficial
| to laypeople. We ran an open database of caselaw and we
| regularly got questions from well-meaning folks trying to
| inform themselves about some legal predicament by reading
| the cases, but it's just not feasible. Lots of folks argue
| that the whole thing is just based on shitty writing
| practices and gatekeeping legal knowledge, which might be
| true, but the difference is still consequential now. I
| actually think this is one area generative AI will be a
| huge boon, though I was skeptical until pretty recently.
|
| Also, accessibility is a concern. Lawyers doing this sort
| of work are often very concerned with making their work
| useful to general audiences. Since subpar access to
| educational resources and cognitive disabilities are over-
| represented among low-income people, they're the most
| heavily affected by this. I wouldn't be surprised if they
| avoided a lot of nuance assuming curious people would just
| read the brief. I imagine they'd have written it
| differently specifically for a largely college-educated
| professional crowd, but I can definitely see why they
| didn't.
| mcmoor wrote:
| 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.
| jhanschoo wrote:
| > 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 wrote:
| 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.
| miiiiiike wrote:
| 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 wrote:
| 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.
| lotsofpulp wrote:
| 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 wrote:
| 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)
| screenobobeano wrote:
| 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.
| carom wrote:
| What is the Chinese system?
| trimethylpurine wrote:
| 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/publication
| s/2024/...
| xbmcuser wrote:
| 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.
| trimethylpurine wrote:
| _> 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.
| pyr0hu wrote:
| 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 wrote:
| 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 wrote:
| _> It's not china ie chinese government_
|
| At least in regards to the US, no one can really know
| that. The Chinese government technically doesn't own
| anything in the US anymore. The alarm is being raised
| because supposedly private Chinese enterprise includes
| ownership of significant American food production (e.g.
| largest pork manufacturer), farm land, homes near
| military facilities, etc. Those are strategically sound
| holdings for national defense in both countries. Suburbs
| are built on farm land, etc. It's very difficult to
| decouple real estate from national defense, really.
|
| That said, "Chinese people" don't own all that much in
| the US overall when compared with other countries. China
| is being singled out because they have been caught spying
| repeatedly. They stood and burned their embassy and
| refused to allow firefighters in. There is military
| posturing. They are invading American airspace over the
| US mainland. All these combined paint such purchases in a
| suspicious light at the very least.
|
| There's enough evidence to know that the Chinese
| government is funding at least some of the purchases. It
| could be most of these purchases. No one can know for
| sure, not even the individual buyers themselves. Only the
| Chinese government knows.
|
| I think the same applies in Europe?
| Y_Y wrote:
| What on earth is a "foreign nation state actor"? Do you
| mean "country"?
| trimethylpurine wrote:
| In the US this term is used to distinguish a country's
| government from its people. It refers specifically to a
| person or enterprise acting at the direction or as part
| of a country's government or military, as opposed to a
| private citizen. That's an important distinction in a
| country obsessed with protecting civil rights where
| nationality is a protected class. Under US law,
| preventing the purchase of a house based on national
| origin is unconstitutional. But if they are acting on
| behalf of a foreign government... You get the idea.
| AuryGlenz wrote:
| Real estate will continue to be a good investment as long
| as demand outstrips supply.
| Georgelemental wrote:
| Didn't the Chinese real estate market collapse recently,
| with several major bankruptcies?
| dash2 wrote:
| Yeah, and allegedly the super-efficient government
| controlled system has built on the order of 4 bn houses
| for 1.5 bn Chinese. This might be the largest and most
| costly housing bubble in history, and I believe it
| happened partly because China is terrified of letting its
| banks fail. If you think the "Greenspan put" is a thing,
| just wait till you hear about the PBOC put.
| oatmeal1 wrote:
| > 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.
| __loam wrote:
| 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 wrote:
| Its not a free market, we are closer to communist than we
| are free markets.
| __loam wrote:
| Communist would be building concrete prefabs until we
| could house everyone. That's one of the few things the
| Soviets did right.
| rocqua wrote:
| 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.
| bluGill wrote:
| Land generaly should increase in value with Inflation.
| There is a lot of land to develop if zoning doesn't get
| in the way-
| rocqua wrote:
| Land increases in real value (beyond inflation) aswell.
| This is due to people building roads nearby, schools
| nearby, nicer houses nearby, etc. It's effectively the
| old adage 'location location location'.
|
| Currently another big driver of land value is zoning. But
| it isn't the only one. And until society starts degrading
| hard, the other drivers aren't going to slow down either.
| maybe with an exception for suburbia where the roads will
| need replacement even though the area doesn't raise
| enough tax revenue to pay for the replacement roads.
| oatmeal1 wrote:
| 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.
| kaashif wrote:
| > 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.
| pas wrote:
| what vacancy numbers are we talking about exactly? and how
| high are they, and how did they change over time?
| vineyardmike wrote:
| 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 wrote:
| 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)
| vineyardmike wrote:
| Yea it was crazy.
|
| The data you showed says there were _7 million_ units
| held off-market. My building had only a few hundred tops.
|
| I wonder if there is more to the story though. I think
| that the building would be less desirable if it was full.
| Skyscrapers already have long lines for elevators, and
| common spaces get a lot of wear and tear from so many
| people in small areas. I wonder if they keep it below
| capacity while they can charge a "newness premium", and
| once that fades they add extra units to the market to
| increase revenue.
| importantbrian wrote:
| 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 wrote:
| But that tax would be passed on to renters, increasing rent
| for everyone.
|
| Unless you're talking about a tax on vacant properties.
| db48x wrote:
| 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.
| antonok wrote:
| 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 wrote:
| 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 wrote:
| > 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 wrote:
| 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 wrote:
| > 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 wrote:
| 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.
| pitaj wrote:
| 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 wrote:
| Because a large percentage of them have a fundamental belief
| that any taxation is theft.
| ClumsyPilot wrote:
| > 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.
| harvey9 wrote:
| Many legislators are also residential landlords. Do not
| expect those regulators to be catching up any time soon.
| passwordoops wrote:
| 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
| CatWChainsaw wrote:
| It would be a much better world if we could get rid of
| rentierism.
| sheepybloke wrote:
| 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.
| kurthr wrote:
| 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.
| ikekkdcjkfke wrote:
| Do like the EU, group up and collective bargain. Strike,
| lock-out etc. are all concepts explored over hundred years
| ago
| rocqua wrote:
| I hope it would work, but fear evictions and police
| intervention would be brutal enough to quash the will to
| fight.
| madsbuch wrote:
| 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 "Bopaelspligt" 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 wrote:
| >In Denmark we have "Bopaelspligt" 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.
| madsbuch wrote:
| 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.
| shortsunblack wrote:
| 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 wrote:
| 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.
| taylorhou wrote:
| 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.
| xnx wrote:
| > 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 wrote:
| Not if landlords are colluding to drive rents up.
| HDThoreaun wrote:
| 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 wrote:
| 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).
| xyzzyz wrote:
| What you describe is not really an issue with algorithmic
| pricing per se, but rather that the particular algorithm at
| hand is shit.
| dclowd9901 wrote:
| 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.
| HaukeHi wrote:
| Isn't Airbnb doing the same?
| wolverine876 wrote:
| How so? Is Airbnb colluding with competitors?
| aaomidi wrote:
| 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 wrote:
| 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.
| jeffbee wrote:
| 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 wrote:
| If income has raised by 20%, why should you expect rent to also
| increase by the same amount?
| jeffbee wrote:
| Because it's a market operating point set by supply and
| demand. Increasing incomes support demand and raise prices.
| Eisenstein wrote:
| 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 wrote:
| 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 wrote:
| Sounds like that isn't a market force if they do it
| without demand changing.
| Dylan16807 wrote:
| 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 wrote:
| The landlords costs hake also gone up 20%
| willis936 wrote:
| Operating, not capital. Real estate is a capital heavy
| area.
| kristjansson wrote:
| > commodity futures markets
|
| What? Commodity futures are viciously competitive open markets,
| where do you see the connection?
| xbar wrote:
| Maximum prison sentences, please.
| buzer wrote:
| 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?
| advael wrote:
| 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 wrote:
| 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.
| staplers wrote:
| 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 wrote:
| 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
| gotoeleven wrote:
| >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?
| goda90 wrote:
| Employees still have to follow their politically appointed
| bosses at the top or risk being fired.
| rocqua wrote:
| 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.
| frob wrote:
| 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.
| ummonk wrote:
| 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.
| d0gsg0w00f wrote:
| 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_.
| killingtime74 wrote:
| (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 wrote:
| 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 wrote:
| What counts as collusion? Would those services that privately
| share salary information between companies count? Doesn't
| seem too different.
| tdb7893 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| pottertheotter wrote:
| 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 wrote:
| I doubt 1st year analysts have much salary complaints.
| exabrial wrote:
| I'd like to see thousands of apartments hand back the increases
| to renters they illegally collected.
| tz18 wrote:
| 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.
| WirelessGigabit wrote:
| That would be nice. It's such an easy defense for companies to
| say: this is what the market pays.
| silisili wrote:
| 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 wrote:
| Collusion is if they, well, _collude_. _Copying_ is not the
| same thing as _colluding_.
| acuozzo wrote:
| At some point copying does become _tacit collusion_ ,
| though.
| willis936 wrote:
| 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 wrote:
| If you say "I want a raise because people in the same
| position at other companies make more money" is that
| collusion too?
| izacus wrote:
| The tech companies already got punished for salary collusion
| and it didn't really change anything.
| trimethylpurine wrote:
| 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.
| jml7c5 wrote:
| 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.
| Dylan16807 wrote:
| > 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 wrote:
| >between the supplier cost and the purchaser value
|
| It is -- it just turns out that the purchaser value is quite
| high!
| Dylan16807 wrote:
| The value of not being homeless is extremely high.
|
| Which is an objectively bad price for housing.
| willseth wrote:
| 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 wrote:
| 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 wrote:
| > 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.
| refurb wrote:
| 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...
| hnburnsy wrote:
| >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.
| hnburnsy wrote:
| Arizona AG sued RealPage and a number of apartment owners over
| this. The AG said RP covers 70% of the market. Complaint here...
|
| https://mcusercontent.com/cc1fad182b6d6f8b1e352e206/files/25...
| maerF0x0 wrote:
| 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 wrote:
| 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 wrote:
| Kill the larger companies.
| yardie wrote:
| Collusion is illegal. Period.
|
| Doesn't matter if a big landlord or little landlord are doing
| it.
| mizzao wrote:
| Is every FTC article usually written in this accessible and
| readable language?
| amath wrote:
| 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?
| gorgoiler wrote:
| 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 wrote:
| 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?
| EchoReflection wrote:
| "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 wrote:
| 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.
| SergeAx wrote:
| 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.
| globalnode wrote:
| 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.
| pipes wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| renewiltord wrote:
| That seems obvious. Otherwise my Cartel LLC can just provide
| price-fixing software that you can white box to bypass anti-
| price-fixing laws.
| madsbuch wrote:
| 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.
| distances wrote:
| 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 wrote:
| 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).
| dublinben wrote:
| 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 wrote:
| Oh yes, I completely agree. These are also issues in both
| Oslo and Copenhagen.
|
| But having rules like this removes some speculation.
| c0balt wrote:
| > [..] 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 wrote:
| 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?
| dmitrygr wrote:
| 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"?
| tqi wrote:
| Mercer is an 80 year old, 25K employee "consulting" firm that
| makes over $2B per year primarily by providing human resources
| consulting, ie helping firms set salaries. Why is that not
| considered price fixing, under the same collusion rationale?
| soerxpso wrote:
| It would probably be relevant that Mercer doesn't ever say,
| "Don't hire anyone for this position if you can't get someone
| willing to do it for the market price." (I'm assuming they
| don't.) You can advise people on how to set the prices of
| things, and you can advise a lot of people at the same time,
| you just can't advise them to participate in what essentially
| amounts to reverse collective bargaining.
| tqi wrote:
| I'm honestly still not clear on the distinction.
|
| > Agreeing to use an algorithm is an agreement. In
| algorithmic collusion, a pricing algorithm combines
| competitor data and spits out the suggested "maximized" rent
| for a unit given local conditions.
|
| This sounds exactly like what a compensation consultant does
| (collect competitor data, including data from other clients,
| and suggest a comp range)?
| parentheses wrote:
| I feel this is a good way to think of regulating AI. Think of the
| AI as a person and apply law accordingly.
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