I agree there's a lot of other barriers to fixing housing! But the algorithmically-driven collusion here is off the wall crazy town. Zero accountability for what would have wrecked any entity doing the same a couple years ago.

But the algorithm is simply not capable of creating San Francisco prices in Houston, because "supply and demand" carries more weight than the algorithm.

Even if you built additional 25% of more properties the algorithm can take 20% off the market with a single pricing decision for months before landlords decide the vaccancies are not worth it.

Buildings don't move, and they're already expensive. Software that enables and enforces price fixing across markets might have exacerbated temporary inelasticity by local zoning, high reliance on import building materials, and restrictions on certain materials or construction, but the system wasn't built to handle a single company with $10T in assets buying up the nation, let alone an industry around it.

Blaming anyone with an economy smaller than a nation state just doesn't explain the scale and timing of the effects.

Why is this happening in communities in the rural South where there's plenty of room to grow? Who's buying up minority communities, inflating prices so that home owners can't afford the tax increases, and then buying those properties from under them and renting them back at a higher rate? It's not anyone you who they'll ever meet at a local town hall or whose home they can march up to to protest, that's for certain.

Like I keep pointing out: if they're so good at raising the prices by more than a percentage point or two, why aren't they jacking up Houston prices to San Francisco prices?

And there is such a thing as pricing power which enables certain actors to control prices without dominance, even then.

Hiding behind an algorithm seems unlikely to work now that there's blood in the water from the recent Realtor lawsuits.

The FTC posted an article about algorithmic price fixing not too long ago too.

Rent overrides required written business justifications, would often trigger follow ups to the agent attempting the override and then their management to dissuade them, and eventually might be refused in the end.

Realpage monitored compliance of customers using their provided prices and those who didn’t meet a certain level would be kicked off the platform.

Pages 17-22 here: https://oag.dc.gov/sites/default/files/2023-11/DC%20OAG%20Re...

This part jumps out:

> the landlord’s regional manager

Why would the owner of a property have a regional manager? That makes it sound like they're deliberately conflating local property managers with actual landlords. I suppose if the actual landlords are passive REIT investors, then there's still a possibility of actual collusion.

In this game theory setup, breaking from the cartel only pays off with excess supply (long vacancies, new units you could lease), which is fairly atypical especially bc of regulatory hurdles. If the market is supply constrained, being part of a cartel maximizes profits. Over longer periods, a competitor could increase supply and inject some dynamism that rewards breaking from the cartel, but for urban/suburban apartment complexes, this is long time and of limited effect to the cartel's pricing power.

This is why the FTC exists to prevent this type of illegal coordination (bc it's so attractive to profits!)

Edit: typo

That is the problem. Not Wall Street. Not some xenophobic "foreign buyers!". Not even short term rentals.

It's zoning and NIMBYs and on top of that now, interest rates.

The 'bogeyman' theories feel good because it means you don't have to face up to the reality of your neighors' NIMBYism. But they're wrong. It is your neighbors.

Rent is falling, but nowhere near as fast as it should be.

These kinds of "algorithms" that are effectively "outsourced collusion" are the reasons why.

Even worse, there is zero reason why these companies should exist except for "collusion as a service".

Rental property pricing isn't rocket science. Set an occupancy target percentage and then adjust the price up or down to reach that target. The rental prices would then be responsive to the market conditions with absolutely no collusion whatsoever.

But that won't do what the landlords want which is prevent the price from going down at all.

I think it's possible that RealPage adds a few percentage points to rents, and that's a bad thing. 1% over a bunch of rentals is a lot of money and harm to renters and that's worth suing over.

That said, 1 or 2% here or there is no match for "supply and demand".

> “Initially, it was very hard for executives to accept that they could operate at 94% or 96% and achieve a higher NOI by increasing rents,”

Based on how multifamily operators refer to the software, it sounds like it was what they were doing before, just supercharged automation.

But this was part where it seemed like the algorithm made a leap, that the optimal trajectory wasn't max occupancy.

So for anyone, they would just opt out of the algorithm and charge a slightly lower price when they get a vacancy. I really dont think cartels work in a market as competitive as real estate rentals. It's a scape goat at best imho.

why are people so eager to blame this problem on obviously miniscule factors?

https://www.theatlantic.com/ideas/archive/2022/11/us-housing...

The software itself makes this very difficult to do--it's one of their dark patterns.

It's not like you signed ownership of the property to this software company.

The only thing you lose is the ability to suss out the prices - the same position you were in previously.

idk why some people are so desperate to ignore the documented pressures here, like are people just completely opposed to the idea that cartels can exist without a notarized agreement to break the law? And apparently you literally don’t even think that is sufficient, because “you could just break the contract” or something lmao.

the amount of openly bad-faith posting and commenting on HN has only continued to get worse and I have to think it’s partially due to the fact that it’s not supposed to be acknowledged. Such “suggestions” really only make it more potent as a weapon on a site/subculture that is already overly predisposed to rules-lawyering as a fallback when they lose an argument.

increasingly realizing the guy whose site redirects referrers from HN to a nutsack is right.

There's also many other explanations of rent increases, such as lack of supply, which are more likely imho.

Pinning this on cartel like behaviour, when the market clearly has a lot of competition, is just moving the spotlight away from the root cause - that of a lack in supply. This is region specific - some regions that have increased supply have then seen rental decreases, while other regions which did not have increased supply (in new builds) have not.

"It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard'." -- Douglas Adams

However, it's behind 4 obscure menu options, and 3 passwords of which your staff have none (I'm exaggerating--but not by much). This is part of the dark patterns I mentioned.

If you are super technically saavy, you can find it and opt out. In reality, the dark patterns are more than sufficient to prevent it.

The private equity development apartments are all in on RealPage and are in absolute lockstep with one another (they also have a whole host of dark patterns which I won't get into). So, it's not enough to have development, you have to have development that isn't private equity driven.

The stuff that has a single owner is several hundred dollars cheaper and the differential is increasing. Some of this is age of the aprtment complex, but the age differential has been pretty small in areas where the university students drive demand.

It's not just RealPage. For example, being able to eat the rental loss of unoccupied apartments is because private equity plays financing games and is willing to give up huge amounts of cash inflow in order to avoid paying any amount of cash outflow.

However, RealPage is one of the legs of the stool.

That doesn't make a lot of sense.

Take a market where there is 100% price transparency - cars, electronics - are a couple examples.

As a manufacturer I can easily find out exactly what my competitors are charging and change my price at will.

Is that collusion? The market is dependent on transparent pricing.