Rent Going Up? One Company's Algorithm Could Be Why. (propublica.org) 169
Some have complained high-paying tech jobs have driven up rents in major tech hubs — creating an exodus that will later drive up rents in other cities.
But ProPublica asks whether there's another technology at work: On a summer day last year, a group of real estate tech executives gathered at a conference hall in Nashville to boast about one of their company's signature products: software that uses a mysterious algorithm to help landlords push the highest possible rents on tenants. "Never before have we seen these numbers," said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company's services. Turning to his colleague, Parsons asked: What role had the software played?
"I think it's driving it, quite honestly," answered Andrew Bowen, another RealPage executive. "As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually."
The celebratory remarks were more than swagger. For years, RealPage has sold software that uses data analytics to suggest daily prices for open units. Property managers across the United States have gushed about how the company's algorithm boosts profits. "The beauty of YieldStar is that it pushes you to go places that you wouldn't have gone if you weren't using it," said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage's software in a testimonial video on the company's website. The nation's largest property management firm, Greystar, found that even in one downturn, its buildings using YieldStar "outperformed their markets by 4.8%," a significant premium above competitors, RealPage said in materials on its website. Greystar uses RealPage's software to price tens of thousands of apartments.
RealPage became the nation's dominant provider of such rent-setting software after federal regulators approved a controversial merger in 2017, a ProPublica investigation found, greatly expanding the company's influence over apartment prices. The move helped the Texas-based company push the client base for its array of real estate tech services past 31,700 customers.
The impact is stark in some markets. 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.... But by RealPage's own admission, its algorithm is helping drive rents higher. "Find out how YieldStar can help you outperform the market 3% to 7%," RealPage urges potential clients on its website.
YieldStar has since swapped in a "Page Not Found" error for their web page urging landlords to "outperform the market 3% to 7%" with their software. (But the original page is still viewable at Archive.org.)
ProPublica points out that "Few tenants know that such software, owned by a privately held company, has had a hand in rent increases across the country." Yet by the end of 2020, RealPage told America's Securities and Exchange Commission that its services helped manage 19.7 million of the country's rental units. Five of America's top 10 property managers use the software.
And interestingly, 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...."
"The software's design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation's largest landlords to indirectly coordinate pricing, potentially in violation of federal law.... RealPage acknowledged that it feeds its clients' internal rent data into its pricing software, giving landlords an aggregated, anonymous look at what their competitors nearby are charging."
But ProPublica asks whether there's another technology at work: On a summer day last year, a group of real estate tech executives gathered at a conference hall in Nashville to boast about one of their company's signature products: software that uses a mysterious algorithm to help landlords push the highest possible rents on tenants. "Never before have we seen these numbers," said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company's services. Turning to his colleague, Parsons asked: What role had the software played?
"I think it's driving it, quite honestly," answered Andrew Bowen, another RealPage executive. "As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually."
The celebratory remarks were more than swagger. For years, RealPage has sold software that uses data analytics to suggest daily prices for open units. Property managers across the United States have gushed about how the company's algorithm boosts profits. "The beauty of YieldStar is that it pushes you to go places that you wouldn't have gone if you weren't using it," said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage's software in a testimonial video on the company's website. The nation's largest property management firm, Greystar, found that even in one downturn, its buildings using YieldStar "outperformed their markets by 4.8%," a significant premium above competitors, RealPage said in materials on its website. Greystar uses RealPage's software to price tens of thousands of apartments.
RealPage became the nation's dominant provider of such rent-setting software after federal regulators approved a controversial merger in 2017, a ProPublica investigation found, greatly expanding the company's influence over apartment prices. The move helped the Texas-based company push the client base for its array of real estate tech services past 31,700 customers.
The impact is stark in some markets. 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.... But by RealPage's own admission, its algorithm is helping drive rents higher. "Find out how YieldStar can help you outperform the market 3% to 7%," RealPage urges potential clients on its website.
YieldStar has since swapped in a "Page Not Found" error for their web page urging landlords to "outperform the market 3% to 7%" with their software. (But the original page is still viewable at Archive.org.)
ProPublica points out that "Few tenants know that such software, owned by a privately held company, has had a hand in rent increases across the country." Yet by the end of 2020, RealPage told America's Securities and Exchange Commission that its services helped manage 19.7 million of the country's rental units. Five of America's top 10 property managers use the software.
And interestingly, 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...."
"The software's design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation's largest landlords to indirectly coordinate pricing, potentially in violation of federal law.... RealPage acknowledged that it feeds its clients' internal rent data into its pricing software, giving landlords an aggregated, anonymous look at what their competitors nearby are charging."
Rent-seeking at its finest (Score:5, Insightful)
Probably stupid, for driving tenants to desperation is bad for properties.
Possibly criminal, for it doesn't matter how it happens, price collusion ought to get anti-racketeering attention.
Re:Rent-seeking at its finest (Score:5, Insightful)
Time to make Senator Warren aware of this.
It's a thinly veiled attempt at avoiding accusations of collusion and price fixing
"One of YieldStar’s main architects was a business executive who had personal experience with an antitrust prosecution.
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."
They know damned well this is price fixing.
Re: Rent-seeking at its finest (Score:2)
The rent death spiral (Score:5, Insightful)
When enough people start paying that higher rent, it creates the justification for the higher rent and everyone else will also start increasing their rents.
And as long as the commodity is scarce enough, this process will continue.
Re:The rent death spiral (Score:5, Interesting)
And as long as the commodity is scarce enough, this process will continue.
The obvious solution is to build more housing. Yet, in many cities, voters support low-growth or no-growth policies. So rents go up, but homeowners see their equity rise.
Re:The rent death spiral (Score:4, Interesting)
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Your statement implies that voters voting for low-growth and no-growth policies aren't citizens. What?
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Children under 18 are citizens and are not voters. Any policy that disproportionately harms families with children harms citizens more than it harms voters.
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Nope... The solution is to take away local/community control.
It's gathering steam in California and communities are fuming about it
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Re:The rent death spiral (Score:5, Interesting)
This is just nonsense. Up until the start of the pandemic, investors were almost desperately seeking yield. There was piles of money sitting on the side lines with people looking for something to do anything to do with it that would generate more income.
REITS and direct real-estate investments were seen by many as a huge opportunity. However, rent controls (makes the investment unprofitable), zoning restrictions, just try to get a suburban county to approve a 50+ unit complex make it impossible. At least before we had to start jacking rates to fight inflation is most certainly NOT existing real-estate investors, or big capital (banks/IBs/developers) keeping new housing from being built.
Now you can accuse them of favoring low density development because they were able to get greater margins there, but again that has a lot do with the political situations around zoning, infrastructure (roads, electrical, sewer, public schools), etc.
If you want to blame someone its the 'landed gentry' that owes property, maybe as a long term capital growth investment, but not as a passive revenue generator. They are very much at odds with the land lords most of the time. They don't' want better infrastructure - higher taxes, reduces the long term capital value of their 'investment' and suddenly there are traffic lights and speed limits, they don't want renters around (at least not the types that want to rent higher density dwellings), more crowded usually more crime and different social 'values'. There is also the plain old NIMBY, we like the character of the place types, a place like Martha's Vineyard would by now have had most of the 'historic' homes torn down the properties carved up and probably relatively posh, but multi family none the less condos built all over by now. These by the way are the people who fund the campaigns for county supervisor boards.
Landlords as a general rule want more units - units are how they make income. Sure like ANY business if you enjoy a monopoly you will chose to do less activity at higher contribution margin. However residential property leasing at commercial scale is pretty competitive in the places where its actually allowed to be. Again up until maybe THIS YEAR for the past decade there has been plenty of money that wants into the development/property management game, to force competition. Its not the land lords who are really to blame.
Re: The rent death spiral (Score:3)
Arenâ(TM)t the two of you agreeing?
Original poster says:
>> Landlords, the ones that already have capital and lines of credit, can afford to pay higher prices for the new supply than renters, and then rent out the buildings.
You said that nonsense, because:
>> investors were almost desperately seeking yield.
Isnâ(TM)t that basically saying the same thing?
Re:The rent death spiral (Score:5, Interesting)
homeowners see their equity rise
This is the fundamental problem with housing in most Western countries. I generally only goes up in value, and the owners want that because it increases their wealth. Meanwhile it gets increasingly difficult for first time buyers to get on the ladder.
In Japan it's the opposite. Houses depreciate and end up nearly worthless after 50-60 years. The land still has value, but to get the most from it the old house needs to be torn down and replaced with a brand new one. That helps keep new houses reasonably priced, and old ones get cheaper with age. New houses tend to be more suited to modern life too, so the culture of doing extensive renovations like many Westerners do doesn't really exist.
The downside is that building new houses isn't great for the environment. At least the new houses tend to be much more efficient though. They aren't tiny either, the average house size in Japan is greater than the average in the UK, even with our large stock of old houses. New builds in the UK are microscopic.
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Another weirdness with Japan is that inheritances can't be declined, and there is no way to abandon property.
So if someone wills you a worthless house, you are stuck with it and may owe a lot of back taxes.
There are houses in remote rural areas that the owners will pay you to take.
Re:The rent death spiral (Score:4, Interesting)
Not sure about that, there are a lot of people who refuse their inheritance in Japan. It's a big enough problem that "land banks" have been created to try to get abandoned houses sold or removed.
If you don't follow the Japanese preference for new houses, and don't mind doing some renovations, you can get housing very cheaply that way.
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In Japan it's the opposite. Houses depreciate and end up nearly worthless after 50-60 years. The land still has value, but to get the most from it the old house needs to be torn down and replaced with a brand new one.
It's exactly the same for Greece, I think it's partly due to earthquakes - at 50 years a house will have survived several large ones, even if it's still standing its structural integrity will not be that great.
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Houses generally depreciate everywhere. It is always the land that appreciates (if there is any appreciation). But Japan has been a generally deflating real estate market because the population is aging and decreasing, so demand for houses (and land) has been low. Even in places where houses are maintained for a very long time (such as Europe where there is housing stock that is hundreds of years old), those old houses have to be significantly updated in order to stay livable.
Re: The rent death spiral (Score:2)
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In Japan it's the opposite. Houses depreciate and end up nearly worthless after 50-60 years. The land still has value, but to get the most from it the old house needs to be torn down and replaced with a brand new one. That helps keep new houses reasonably priced, and old ones get cheaper with age. New houses tend to be more suited to modern life too, so the culture of doing extensive renovations like many Westerners do doesn't really exist.
Interesting, I've never heard of that. Any links or articles? Is this primarily outside of the big cities?
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It is also linked to population. The population of Japan has been decreasing. So I would expect a low pressure on the housing market.
The population in the US has been fast growing. So even if a unit depreciates relatively to a new unit, its market value may go up in absolute dollars.
The city I live in gained 15% population in 9 years and doubled in 30 years. The prices will go up with that kind of population growth.
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Re:The rent death spiral (Score:4, Interesting)
A factor further reinforcing this is that after what you describe goes on for a bit working class voters are forced to flee such areas in order to be able to afford to live and so the only voters that end up being left are property owners and those in high paying jobs that they hope will one day lead to them owning property. In other words, no one is left in these communities to vote for the incredibly necessary change that is needed in these communities.
This is a exactly the reason I've been saying for years that the state of California needs to step in and dictate Silicon Valley's housing growth. Yes, in a way that's very undemocratic and that does suck but residents of the valley have let their housing market get so far out of wack it's effecting property values 5 counties away from it. Silicon Valley's incredibly poor leadership is negatively effecting huge swaths of a massive and highly populous state. At some point something has to be done for the rest of the State's voters.
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One must take into consideration that the majority of voters are NOT property owners, so it's not a matter of voting to increase equity.
"If we do BLANK it will forever alter our community that has ALWAYS been this way"... Where always is some value between 10 and 30 years.
Our so called journalists play a HUGE roll in this with articles about "beloved 'spots' closing after a mere 15 years".. And those 'spots' operated 4 hours a day, 3 or 4 days a week! Those aren't businesses, they're hobby play toys for th
Re: The rent death spiral (Score:2)
Well "market prices" say fuck you and your children
Re:The rent death spiral (Score:5, Interesting)
Both Adam Smith and Karl Marx spoke (at length) about rent-seeking behavior and its effects on society. Both felt it was evil, and for the same reasons. I believe that modern American style capitalism actually is not capitalism at all, but a corrupt pile of rent-seeking mercantilism, and that is why the country is falling apart. Not to mention a feckless media that does nothing but sow conflict and contention, truth be damned.
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...Not to mention a feckless media that does nothing but sow conflict and contention, truth be damned.
They have to do something to get viewers/readers in the highly competitive "entertainment" market. The viewers are far more important to the media than actual news.
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I believe that modern American style capitalism actually is not capitalism at all, but a corrupt pile of rent-seeking mercantilism, and that is why the country is falling apart.
I could not agree more. It's a puzzle, as both capitalism and communism are fundamantally at odds with human self interest. Both systems ideally may work, but we've seen both systems be absolutely corrupted as well.
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I believe that modern American style capitalism actually is not capitalism at all, but a corrupt pile of rent-seeking mercantilism, and that is why the country is falling apart.
I could not agree more. It's a puzzle, as both capitalism and communism are fundamantally at odds with human self interest. Both systems ideally may work, but we've seen both systems be absolutely corrupted as well.
So first, capitalism is what people do when they trade instead of raid. It is as old as the hills and is a natural consequence of how people interact. How you think capitalism is at odds with human nature is beyond me. Communism on the other hand is such a good idea it has to be enforced at the point of a gun. There is nothing natural about communism.
No system is perfect, utopia doesn't exist (because no two people can agree what it looks like) and there is never enough for everyone to have everything
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Delighted to hear you read and understood my book.
-Adam Smith
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A coworker temporarily living locally was looking for apartments in San Jose, where rent is already high in upscale areas. But at one place he was talking with the management about renting, and there was a price on the computer screen. As they were talking the screen was refreshed and the price had gone up by $5, dynamically.
We joked that we could get some actors to re-enact a mugging outside, wait for the price to plummet, then lock in a 12 month lease.
Re:The rent death spiral (Score:5, Funny)
The Soviets also ate food. Don't repeat their mistake.
Re:The rent death spiral (Score:4, Informative)
The Soviets also ate food. Don't repeat their mistake.
Not all of them were lucky enough to eat food [worldhistorycommons.org]...
Re:The rent death spiral (Score:5, Interesting)
OPEC (Score:5, Insightful)
Oh boy, they are asking for cities to start mandating apartment complexes to have certain occupancy rates. I'm not saying I'd support local governments doing that, but it'll certainly be humorous.
OPEC cartel tactics, reduce the supply of an essential product by 5% such that the demand exceeds supply and people will pay 10x -- as much as they can afford. What's the term for that in economics, where a slight reduction in supply causes the price of the item to increase a huge amount?
Re:OPEC (Score:5, Informative)
What's the term for that in economics, where a slight reduction in supply causes the price of the item to increase a huge amount?
The term is Inelastic demand [wikipedia.org].
But rents are not so inelastic. People can move to smaller apartments or further out into the 'burbs.
Higher rents will also incentivize people to rent out a spare bedroom or basement.
Re: OPEC (Score:2)
I live in the town that is #1 is lack of housing to population. It's fucked.
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Have you considered that maybe you're part of the problem?
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It feels hilarious to see this comment after just reading a different article from my country where a couple DID move out of the big city and now they're being blamed for that, too, after energy prices went through the roof.
You can't win.
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What's the term for that in economics, where a slight reduction in supply causes the price of the item to increase a huge amount?
The term is Inelastic demand [wikipedia.org].
But rents are not so inelastic. People can move to smaller apartments or further out into the 'burbs.
No, stop doing that. I live in what used to be a sleepy little suburb. No real issues with expanding and whatnot but over the past 5 years apartment complexes have been popping up like fireant hills. I have no issues with more low cost high density housing either. However, you now have 200k people jamming up all of the roads that were built for a town of 50k. Now we have tons of traffic and more and more commuters taking shortcuts through neighborhoods, etc.
Developers don't care about these issues and it
Re:OPEC (Score:5, Insightful)
Oh boy, they are asking for cities to start mandating apartment complexes to have certain occupancy rates.
Probably the best way to solve this problem is indeed an empty unit tax. Any unit not occupied by the owner or a renter with a lease 51% of the year or more should get taxed heavily and the money spent increasing the housing supply, particularly of units suitable for people with low incomes (which are barely being built today.) This also taxes the airbnbs which are making a serious dent in the housing supply themselves.
Re: OPEC (Score:2)
Probably the best way to solve this problem is indeed an empty unit tax.
Enforcement will be an issue. How will they determine whether a unit is occupied or not? Seattle politicians are licking their chops over just such a system right now. Because it will require the implementation of a propiska [wikipedia.org] system.
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Enforcement will be an issue. How will they determine whether a unit is occupied or not?
A combo of utility bills and citizen reports, probably.
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If the government wants to prevent housing, why would they levy a tax to gather money to build more?
Re:OPEC (Score:5, Insightful)
Oh boy, they are asking for cities to start mandating apartment complexes to have certain occupancy rates. I'm not saying I'd support local governments doing that, but it'll certainly be humorous.
OPEC cartel tactics, reduce the supply of an essential product by 5% such that the demand exceeds supply and people will pay 10x -- as much as they can afford. What's the term for that in economics, where a slight reduction in supply causes the price of the item to increase a huge amount?
In my graduate microeconomics class, the prof (as they usually do) harped again and again that equilibrium on the supply / demand curve was the ideal place for suppliers to be. That is, that pricing should be set so that exact demand equals exact supply.
I went round and round with him all semester that, no, producers would prefer a degree of shortage that would allow them to charge higher prices and that there is no rational reason that they'd want to ensure that "enough" consumers got their product etc.
Economics as a discipline is just fucked because they still to this day outright refuse to accept that so many companies find it in their best interest to be bad actors. Meanwhile the tendencies of companies to engage in sociopathic behavior is well known in disciplines that actually study the real world. I'm cautiously optimistic that behavioral economics will have an impact over time as new Ph.ds take over the field, but that could take 20 or 30 years.
Re:OPEC (Score:5, Informative)
You went round and round because he was correct and you are not.
Producers only like supply under demand, when they enjoy some kind of monopoly or cartel status. That gets a little muddier but only slightly when you consider something like OPEC, who does not have the entirely of oil producers in their little club but has enough of it that the remaining players cant logistically meet demand even if they want to do so.
In an otherwise open market place a producer would want to find the equilibrium point where as much as the demand is statisfied as possible, where they are profitable on the activity. To do otherwise is an invitation for other producers to enter the market and take your market share.
If there is a demand out there for 100 widgets at $100. Alice can easily produce 100 widgets at a landed cost of $99. Certainly in isolation Alice might think that she would rather produce only 90 widgets and let the less price sensitive buyer bid them up to $120. However if Tim can also enter the widget market profitably at $100 - he will. Alice ends up only selling 90 widgets (or less)... and only for $100.
Re: OPEC (Score:2)
> easily produce
When thatâ(TM)s the case your math works. Housing is not easily produced, particularly at scale in a short period of time.
Re: OPEC (Score:2)
Housing is not easily produced
This is true. And developers, in cahoots with local governments, struggle to keep it that way. You want to build a duplex on an empty lot you own and rent it for a bit of extra income? You will be screwed over by the local planning commission. You are a big developer who can afford to drop $20 million or more on a parcel of land and build apartments? The county council will line up to kiss your ass. In return for some kick-backs when they sign your permits.
Politicians LIKE dealing with larger businesses. I
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housing is very easy to produce. Outside of a few trades, most of the effort is low technology, low capital requirement, low skill labor.
The barriers are mostly artificial - and mostly have more to do with government zoning and infrastructure decisions.
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Yeah that sounds rational doesn't it. Except that there's no natural law that says this is the way it must always be. Yes you're describing rational psychology as it has existed in the past. But there are many other aspects to supply and demand, including barriers to entry. And if a whole bunch of companies start doing something all at the same time, is that collusion, or just everyone coming to the same conclusion that profiteering is, well profitable.
The pandemic pretty much ended the era of suppliers
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What are you even talking about. By definition, if their is extra demand, you produce more to make even more profit. No one wants to leave money on the table. By definition, the point of equilibrium is the highest total profits. And this is only if a company has a complete and unapproachable monopoly. Otherwise they might want to drag down the price per unit to prevent other people swooping in.
The graph is a hill. On one side you produce 1 unit, and sell it for the most money you could ever get for such an
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They are only outperforming the market by 5%, so presumably their decrease in occupancy is well under 5%. This is not NY, yet. But that is beside the point, we know what drives these prices and what solves them, regulation put in place to stop housing being built. If 90% of the price of building is not bribes and permits then the market just builds so many houses that this is no longer a problem.
How is this not felony price fixing? (Score:5, Insightful)
This is competitors conspiring together to increase prices of a commodity. How is this legal?
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This is competitors conspiring together to increase prices of a commodity. How is this legal?
Collusion is illegal if it is explicit and deliberate.
Example: You own a gas station and raise the price by 10 cents, then wait an hour for the gas station across the street to do the same. If they don't, then you drop your price back.
That's not illegal because there is no explicit agreement.
This is similar. Using the same pricing software is not explicit collusion. Any market participant is free to "defect" at any time and undercut the recommended price.
Re:How is this not felony price fixing? (Score:5, Insightful)
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No, that is "price transparency," not collusion.
A defining characteristic of a cartel is that each participant acts against their own interest with the assurance that the other participants will do the same, to their collective benefit.
In the scenario you describe, there is no penalty for defecting. Employers have no incentive to refuse to hire a prospective employee to benefit their competitors and no reason to believe their competitors will sacrifice to help them.
Re:How is this not felony price fixing? (Score:5, Interesting)
I'm looking at the RealPage terms of service [realpage.com] and what I'm seeing is that they get quite deeply inside the private information of the business with pricing meetings and so on. It doesn't look like "transparency" but more like a plausibly deniable set up for doing collusion where they get to blame their employees if ever found out. Of course they would deny that and I guess it's plausible that someone would come up with such an arrangement for other commercial reasons.
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wait so if you and I have something common to sell and we dont talk to eachother, but our price setting software does, we have outsourced the collusion?!
holy shit that's brilliant!
restaurants & bars would benefit from this as well.
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Here's our solution (Score:4, Interesting)
A long time ago, the city started building their own apartment complexes. You can only rent them, not buy them, but the rents are fairly affordable. You're dealing with all sorts of ridiculous limitations and the goal was very obviously to house as many people as could be possible in the least amount of space, so don't expect a lot of anemities from the building themselves... except that every kind of infrastructure you could possibly want is usually very close nearby because of course a lot of businesses were quite interested in setting up shop where a lot of people are located, and the city also made sure that there's plenty of shopping space available that they also own and rent out to the businesses.
Rents haven't moved a lot in the more recent past because while people are of course more interested in living in more modern apartments rather than these, if you push people too far they will quickly move across the street into one of these buildings.
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That sounds like "the projects" of the 60s and 70s.
Many of them became crime-infested SHs and were torn down.
It is a bad idea to concentrate low-income people in one place. It is also a bad idea to concentrate renters in one place. You end up with few jobs, few people with a stake in the community, dysfunctional underfunded schools, etc.
It is better to spread out low-income families, so they are close to jobs and decent education. Rent vouchers such as Section 8 [wikipedia.org] are one way to do that.
Re:Here's our solution (Score:4, Informative)
That's why they don't do that. They build an apartment complex in some area in town, with shops and a movie complex, maybe some other leisure activities inside, and it's quite attractive. Granted, the corridors can be a bit drab, but these apartments are pretty heavily sought after because they're very affordable and have a quite nice infrastructure. And with the infrastructure, private apartments cluster around it, too.
Also, they avoided putting them into some suburb and forgetting about them but sprinkled them quite liberally all across town, which avoided the ghettoisation and also made these apartments quite attractive to "normal" people who don't have to rely on handouts.
Come on (Score:2)
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The rents are getting higher because of supply&demand (which, in the end, is likely mostly driven by inflation).
Housing costs have risen much faster than the CPI, so it is not just inflation.
The most significant factor is government restrictions on the construction of new housing. In California coastal cities, 90-95% of residential building permits are denied.
Cities with pro-growth policies and permissive zoning have much more affordable housing.
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>The rents are getting higher because of supply&demand (which, in the end, is likely mostly driven by inflation). The 'software causes this' is, in the end, just a correlation. Not causation.
"YieldStar can help you outperform the market 3% to 7%" from TFS. So the software is causing inflation, literally.
Engineering ethics (Score:5, Insightful)
When I graduated as an engineer I had to sign a pledge that I would not use my skills for unethical purposes. While there are some grey zones in ethics (for example working for military projects, which can be considered ethical or unethical depending on one's standpoint on the use of force to solve conflicts), I clearly see no way that this price-gouging software can ever be considered "ethical", unless in a sociopath's way of being ethical of course. It's really saddening to see software engineering skills used for something like that instead of actually making the world a better place. Meh.
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Indeed. If this was written by somebody with an academic engineering or CS-type title, that title should probably be removed.
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It's why SE's aren't PE's.
Another reason is they don't want to be liable for software bugs.
the most appropriate response (Score:2)
à la lanterne!
It pushes you places (Score:5, Insightful)
it pushes you to go places that you wouldn't have gone if you weren't using it
Translation: leaving the decision to the software allows you to behave like a real heartless bastard but not feel any remorse, like if you yourself decided to jack up the rent and put the squeeze on your tenant.
Re: It pushes you places (Score:2)
Not my fault! The software told me to kick you out. Market prices blah blah blah I have no control over my own choices
An automated price-fixing cartel (Score:2)
Wow.
Corporations buy all the houses (Score:3)
Most of the houses around you are owned by large corporations that don't give a fuck about anything except extracting money. Most of my town burnt in a fire a couple years ago. To rent a house was almost double what a mortgage would be.. if you could afford the 100k down. I thankfully could, but had I not bought a drug house 4 years ago, I could no longer afford to live in the town I grew up in.
Here it is then (Score:3)
The software sets your rent, sets the price of an avocado and bottle of milk., decides if the IRS audits you.
In 5 years time: it acts as a magistrate and sets your fine (or Social Credit Score), decides if you can access your superannuation or a pension and creates or curates everything you look at, watch, listen to or read. Fun times.
National property tax (Score:4, Interesting)
Housing should be for housing not an investment. You want to save for retirement? Invest in a company that makes something instead of in property which makes nothing.
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Time for a national property tax of 5% on current assessed value exempted for one self occupied property. Also no depreciation and exchanges. Basically make it unprofitable to be a landlord. Use the money collected to provide downpayment assistance so renters can buy their units as landlords go out of business and sell off the apartments as condos.
You realize that taxes are already basically passed straight through to the tenants, right? What you propose would just be a 5% tax on renters for the property they occupy. Since it would be national, all landlords would be raising their rent 5% at the same time, so it would change nothing except to screw renters even more, and probably raise property values for those that already own (since owning would become a bit more attractive vs. renting) - making it even harder for renters to get off the treadmill.
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You realize it would be exempted for self owned so no the price of housing would not go up, rather demand for investment properties would fall. The rent of a property has nothing to do with its cost. Its related to what the market will bear and it is already priced to perfection. It cant go up.
The price of buying a house would go up because renting would become more expensive, but owning a house wouldn't due to the owner-occupied exemption. That means that the calculus of deciding whether to rent or buy is pushed more towards buy, increasing demand, and thus prices.
Rent would go up because *all* landlords' costs would go up at the same time. They can either eat it, or raise rents by 5% - which would be the likely choice, since all other landlords would likely be doing the same, so a particular pr
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>The rent of a property has nothing to do with its cost. Its related to what the market will bear and it is already priced to perfection. It cant go up.
"Apartment rents had recently shot up by as much as 14.5%" (from TFS).
So is is *just now* priced to perfection (after the increase), or do you suppose that the 4%-7% increase provided by the software will make it "priced to perfection"?
Until the next data update of course (which will find higher prices in the market because of the last 4-5% increase and t
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As stated by the parent comment, it will not be taxed if you are buying to stay. And if the 5% or whatever % is put into affordable housing schemes, more people will end up owning homes and eventually the landlords will not find so many tenants and so either be forced to sell the homes / go into some other line of business / go bankrupt.
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>If it's unprofitable to be a landlord, then houses and apartments won't be rented anymore, except if renting to the wealthy who can afford artificially-high rents.
So what in the world do you expect them to do with all of the less than stellar apartments and houses that the wealthy won't rent? Just pay taxes on them forever?
>Young adults will be stuck in their parents' homes until they can afford a downpayment and a mortgage.
I would suppose they would end up buying one of the many houses or condos th
Just like Monopoly (Score:5, Insightful)
And to all those people who think public institutions shouldn't exert any control: if you're anti-government (oh noes, we have rules!) you're anti-democracy. One is a subset of the other.
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Just a reminder, free market != no rules. If you don't control the positive feedback loops, a few people end up owning everything just like in the board game and that's the opposite of free market.
No government regulation != no regulation. As long as there are low barriers to entry, as soon as profits go up, new investors tend to spring up and enter the market at a lower price and that is what provides the negative feedback.
In this case, there are two markets where competitors might jump in. First is a competitor to RealPage. If they tend to set prices beyond the profit maximizing point, someone else can relatively easily start a competing service which suggest lower, more profit maximizing, prices a
It's not that complicated (Score:2)
This "algorithm" really isn't all that complicated. It just needs to have a narcissistic streak in it that goes something like this: "I'm awesome (because I've always been told that) and therefore I deserve more money for the same thing I did last year... and the year before that."
Rent lower in less-regulated places like Houston (Score:4, Informative)
In Houston, it's still possible to rent a nice 2-bedroom apartment for about $1,300 a month. Houston's housing market is very loosely regulated, some would say TOO loosely. Yet rent rates stay relatively low.
One thing Houston has in its favor, when it comes to housing, is that builders are allowed to build, for the most part, where they see fit. Yet the city looks very much like other cities.
It's not likely price-fixing algorithms that are the culprit here, but over-regulation.
How is this possible? (Score:2)
Too little available apartments / homes, too many people who seek them.
Yes, of course the software algorithm is exploitative. They found a "niche market", and milking it (I mean us).
However the crucial component nobody talks about is: lack of housing. Not "affordable" housing, not "public" housing, but plain old housing.
If this is a musical chairs game, and those who control the chairs have a financial incentive in making sure there are not enough to go around, what do you think will happen?
(extreme example
Re:Increase housing supply you ninnies! (Score:5, Interesting)
The ONLY way for housing to be affordable is to build more units
That is not true. There are sixteen million empty homes in America [www.nar.realtor] , probably more because the number is probably not counting vacation homes, granny units, etc. The supply of homes available at market rate is artificially constrained by a number of parties, including banks which foreclosed on a bunch of should-have-been-illegal subprime loans we bailed them out for. They refuse to sell the properties for what the market will bear, presumably because they were waiting for these investment scams to come along and buy them at inflated rates.
We should institute rent control, make it illegal to use houses as investments, and also institute an empty home tax to incentivize rental or sale of currently empty units. EACH of those things will make more units available, contrary to your baldly false assertion.
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Reducing the number of empty homes is not very feasible. They have an empty home tax in Vancouver, but it hasn't reduced homelessness or rent by much, if at all.
https://www.vancouverisawesome... [vancouverisawesome.com]
https://www.vancouverisawesome... [vancouverisawesome.com]
To solve homelessness, we need to build more mental health and drug rehab facilities and also allow the building of large numbers of affordable housing units.
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There are sixteen million empty homes in America [www.nar.realtor
I visited a west coast city recently, and I stayed for a week in an airbnb. The apartment was near downtown in a relatively new residential tower. Judging by other people in the building, signs by other apartment doors, etc., a LOT of the apartments are being used for airbnbers. And yeah, this city is one that is suffering a housing shortage, homelessness crisis, etc. Not as bad as San Francisco, but bad.
I guess I'm part of the problem.
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Those states have a small percentage of total residences, so their low vacancy rates add up to a relatively small number of homes. Also, lots of people would like to live in Vermont. :)
Re:Increase housing supply you ninnies! (Score:4, Informative)
This suggests that rents are currently higher than they need to be
From the landlord's viewpoint, this suggests that rents were lower than they needed to be.
and that supply and demand are in fact not the main factor in setting the levels of rent.
It is still supply and demand. The software just helps landlords to avoid underestimating demand.
You know what other system set prices centrally using software that gathered information from consumer activity? Communist Russia.
The Soviet Union never set prices based on "consumer activity".
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The Soviet Union never set prices based on "consumer activity".
I base this only on claims made in Adam Curtis' new film TraumaZone, in which the final Soviet experiment is detailed. The one in which they tried to create a computer system to run communism in a single city. Perhaps the details of this are incorrect, but it's not important.
The software just helps landlords to avoid underestimating demand.
It seems that what the software does is push the rent as high as possible, to the extent that it calculates having some apartments empty is worth it. The supply is being de-facto withheld, by pricing out of the reach of most people.
From the landlord's viewpoint, this suggests that rents were lower than they needed to be.
Lowe
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it calculates having some apartments empty is worth it.
That has always been true. The rule of thumb is that you will collect 80% of the rent. 10% will be vacant, and another 10% in arrears. If you have less than 10% vacancies, then you are likely undercharging for rent.
All this software does is help landlords manage those rates.
The supply is being de-facto withheld
Grocery stores also have food sitting on their shelves rather than in the customers' carts. That doesn't mean they are overcharging.
This is peoples homes, after all.
And it is how landlords earn their living. Many landlords are retirees who rent out their homes rather th
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>All this software does is help landlords manage those rates.
No, I believe it touts 5%-8% profit above market rates for your area. And if everyone in the area is using it, this acts as a positive pressure on prices, as the software keeps suggesting greater and greater rents. Because there is *also* a feedback loop where the current prices (that have been also artificially inflated by the software) are used to calculate the new inflated prices.
Nice, huh?
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No, I believe it touts 5%-8% profit above market rates for your area.
Only in Lake Wobegone. Everywhere else, once everyone is using their product, they will become the market rate. They can only get over market returns if parts of the market are not using their software.
And if everyone in the area is using it, this acts as a positive pressure on prices, as the software keeps suggesting greater and greater rents.
No doubt, until some enterprising landlord discovers the software has overshot, vacancy/arrears/turnover rates are higher than they like, and rents for less than the algorithm suggests. Or, for that matter, until someone else creates a competing but less aggressive algorithm for setting prices. I don't see a
Re:Increase housing supply you ninnies! (Score:5, Insightful)
The software just helps landlords to avoid underestimating demand.
It's more subtle than that. Once the software is widely used, it creates an auto-cartel. Prices rise in line with the market capture of the software, not "natural" demand.
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I believe (well, actually have evidence) that your belief is factually wrong, or at best you're only looking at the very recent past. The price increase this software is causing is just the cherry on top of the 3-tier wedding cake of price increases caused by progressively choking off housing supply for many decades:
https://www.weforum.org/agenda... [weforum.org]
In the first world this was done somewhat intentionally to create a "housing ladder" so that boomers could each collect many hundreds of thousands of dollars for