14 Big Landlords Used Software To Collude on Rent Prices, DC Lawsuit Says (arstechnica.com) 52
DC's attorney general has sued 14 of the city's largest landlord firms, claiming they entered into agreements with a property management software firm to keep rent prices high in a city with a housing affordability crisis. From a report: The complaint, filed earlier today by Attorney General Brian Schwalb, focuses on the multifamily landlords' use of software from Texas-based firm RealPage, which suggests rental prices based on a pricing algorithm. Key to those models, according to the suit, is the data fed in from the landlords and the pressure RealPage puts on them to stick to the code-derived rental rates. "RealPage and the defendant landlords illegally colluded to artificially raise rents by participating in a centralized, anticompetitive scheme, causing District residents to pay millions of dollars above fair market prices," Schwalb said in a release tied to the complaint.
The collaboration "amounts to a District-wide housing cartel," Schwalb said, noting that "well over" 30 percent of buildings with five or more units use RealPage's software, along with 60 percent of 50-unit-plus buildings. Across a wider Washington-Arlington-Alexandria area, more than 90 percent of units in large buildings are subject to RealPage pricing, according to Schwalb's office. RealPage's rent management service, YieldStar, has come under increasing scrutiny in recent years. RealPage and the property management firms utilizing their software were the subject of a class-action suit filed in the Southern District of California in October 2022, alleging the "cartel" artificially inflated prices. The Department of Justice's Antitrust Division opened an investigation in November 2022 into RealPage's role in potential landlord collusion.
The collaboration "amounts to a District-wide housing cartel," Schwalb said, noting that "well over" 30 percent of buildings with five or more units use RealPage's software, along with 60 percent of 50-unit-plus buildings. Across a wider Washington-Arlington-Alexandria area, more than 90 percent of units in large buildings are subject to RealPage pricing, according to Schwalb's office. RealPage's rent management service, YieldStar, has come under increasing scrutiny in recent years. RealPage and the property management firms utilizing their software were the subject of a class-action suit filed in the Southern District of California in October 2022, alleging the "cartel" artificially inflated prices. The Department of Justice's Antitrust Division opened an investigation in November 2022 into RealPage's role in potential landlord collusion.
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As I understand it unions are registered with the NLRB and then formally recognized.
To start the process, you must file an election petition with your local NLRB office. Along with the petition, you will need to show that at least 30% of the employees support your election petition, which is usually done with authorization cards or a petition signed by your co-workers. An NLRB agent will then make sure that an election in your particular workgroup is appropriate and take steps to set the time, date, and pla
Re:How is this different than Unions? (Score:5, Informative)
Collective bargaining is collective bargaining.
In this instance it's called 'collusion', not 'collective bargaining', you have businesses that ostensibly are supposed to compete against each other unlawfully coordinating to artificially raise prices. That is not even close to the same thing as labor collective bargaining and I suspect you already know that.
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Re:How is this different than Unions? (Score:5, Insightful)
But I expect you already know damn well what the difference is. Nobody is as stupid as that question, but plenty would take sadistic pleasure in it.
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It's a standard complaint by those who have a world view of laissez-faire capitalism, a world view that also encompasses the idea that labour unions are bad and interfere with their desired economic models. So these people often make this comparison - if workers can get together to fight against our absuses of them, why can't companies get together without violating laws that we never voted for?
Capitalism needs competition, yet laissez-faire economics tends to reduce competition. Collusion is certainly al
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"How dare you squat in my investment property? Do I come and squat in your investment properties, Mr. Homeless Man?" -Rich Guy, definitely a Republican voter.
Re:How is this different than Unions? (Score:5, Insightful)
There are legal and illegal ways to organize. The government regulates this shit.
Ethnically a worker is at a huge disadvantage in negation compared to an employer. Unions are an attempt to bring that power in balance through collective bargaining. Maybe it gets it wrong, but that's the intent at least.
Landlords have a lot of advantages over tenants. And the heaps of regulations already placed on landlords is an attempt to restrain that power somewhat. It's not perfect, but again that's the intent.
We don't live in a free society, for some definitions of "free". We aren't free (anymore) to create contracts of indentured servitude or to simply own property and the serfs that live on it. We keep moving further and further away to the medieval ideals that a handful of idiots wish to return to.
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Err, I thought race and ethnicity were already not allowed to be used in employment matters....union or not...?
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that's an embarrassing typo.
I was originally going to say "Ethically speaking blah blah blah". Then I deleted it and forgot to reword it. Then I didn't even notice that I misspelled it. I should either put my reading glasses on in the morning or not be too lazy to proofread my own post.
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Hah, I didn't understand the reply or why it was such a non-sequitur until I reread what you posted.
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You would think so, but if you don't have a "white" sounding name you are less likely to get an interview [businessinsider.com], let alone be hired [inc.com].
Black and white callbacks (Score:2)
Err, I thought race and ethnicity were already not allowed to be used in employment matters....union or not...?
You would think so, but if you don't have a "white" sounding name you are less likely to get an interview [businessinsider.com], let alone be hired [inc.com].
Incorrect.
The study cited in that article was not replicated [datacolada.org] in a followup study. Looking at the names, it was discovered that there are "poor sounding" and "rich sounding" names for both blacks (Jamal and Lakisha are low-sounding, while Darius and Malik are high-sounding) and whites (Bubba and Bobby Sue versus Alexander).
A further study used Mechanical Turk to measure the level of poor/rich sounding in names, and found that, blacks were *more* likely to get callbacks than whites.
That's right: once economic
Reason for Unions (Score:2)
Unions are not there to guarantee
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Are you being paid to post propaganda, or are you just stupid?
The landlord companies are the bosses. The renters are the employees. Is that any clearer?
Comparing prices (Score:2)
What is stopping them from using software to just look up the prices of similar properties to set rents? People do it to set the price of properties all the time.
Collusion - they agreed to use the pricing model (Score:5, Informative)
57. RealPage documents show the methods by which the company suppresses the Defendant Landlords’ independent price decision-making while also securing their cooperation in the cartel. RealPage training documents state: “You should be compliant”—i.e., each, individually participating landlord must impose the rents generated by the RealPage RM Software—“90+% of the time to see the best results in your revenue management.” This principle is reinforced during in-person trainings when landlords join the cartel.
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"Cartel" sounds too fancy for them though. Maybe "cabal"?
Re: Collusion - they agreed to use the pricing mod (Score:2)
If I own a gas station and if every morning I wait to see what my competitor across the street changes his price to before I change mine for the day (gas stations are typically only allowed to alter prices once a day), that's OK, right? How is this different?
Before Real page came along, I'm certain landlords looked at neighboring apartment complexes to see what others are getting for similar units, that's legal, right?
All realpage does is automate the process - why are landlords expected to not evaluate the
Re: Collusion - they agreed to use the pricing mo (Score:2)
That is where it becomes collusion to raise prices. If they didn't require landlords working with them to use the prices they set, and just had them as loose guidlines, it actually would be legal.
With the requirement of using their minimums, over time the prices will move upward because no one is able to negotiate lower than the floor t
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What is stopping them from using software to just look up the prices of similar properties to set rents?
Nothing. That's the first step of the process they do right now, only in an automated way.
Setting rent based on the prices of similar properties isn't the problem though.
Colluding to agree on a fixed multiple to use for multiplying that price by is the problem.
They would be breaking anticompetition laws by agreeing on a fixed amount to add, regardless of how they determine the market rate they are adding it too.
People do it to set the price of properties all the time.
"People" rarely are renting out thousands of homes. Regardless, if multiple people renting out
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It is a problem, and in this case maybe landlords felt compelled to follow the advice of a service that they voluntarily decided to use, but stand ten feet back and the result appears to be price fixing.
Making this digital is indeed a problem. Locally here in San Jose at least there are web sites that give you estimates on rental prices that are updated very frequently. A temporary worker was looking for places to rent and reported that frequently the leasing desks would refresh the browser before giving
Adequate supply would prevent collusion (Score:2, Insightful)
If there was adequate housing supply in DC, then collusion would be impossible. In fact, if there was an oversupply, they would be competing to lower prices.
The problem here isn't collusion; the problem is that it's impossible create the necessary amounts of housing. Instead, the government spends time trying to control rents.
Re:Adequate supply would prevent collusion (Score:5, Insightful)
You don't know how collusion works, do you? There are a multitude of examples of it happening in otherwise competitive marketplaces. You're not wrong that it should be easier to build housing in the US but our issues go much deeper than lack of supply.
In the US, you can leave a rental unit vacant almost indefinitely, and take the cost of doing so off your income taxes. In most other Western countries you are penalized for having a vacant property like that. I'm from the Rest Belt and have lived in cities with dwindling population and surplus of housing stock, yet, magically, in those cities rent hikes still outpace inflation by many times. In my hometown you can still, to this day, get a decent house for under 100k, yet the average rent is more than three times the average mortgage, far above and beyond the actual cost and reasonable profit of managing a rental property.
So yeah, we do need to make it easier to build, but that alone won't solve the problem of #rentistoodamnhigh.
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The point of colluding is to overcome things like adequate supply.
When big landlords collude, they don't just fix prices. They work with builders to limit supply. And when new properties come on the market, they make sure they get to buy them so nobody else can rent them any cheaper than the price they set.
Finally something is done for the tenants (Score:3)
Now if the justice system could help the landlords too and could take a look at homeowners' associations...
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THIS!!!
I still can't quite get it in my head how HOA's are legal...if YOU own the property, yet THEY....not the elected city govt can tell you how and what to do with your property....etc.
If I had Powerball money, I'd hire legal teams and try to get HOA's run out of the US.
Re:Finally something is done for the tenants (Score:4, Insightful)
If I had Powerball money, I'd hire legal teams and try to get HOA's run out of the US.
You'd lose. The State of Washington had an exempt existing HOAs [hoamanagement.com] from the recent law that aimed to expand housing availability. It comes under the contract clause [wikipedia.org] and if a large State Government can't find a way around it I'm skeptical you could.
Don't disagree with a single thing you say about HOAs, for what it's worth, they are the absolute worst. At the bare minimum we should be outlawing the creation of new ones.
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Personally, I've never lived where I been under an HOA.
Re:Finally something is done for the tenants (Score:5, Informative)
Not necessarily. When building new communities, the developer can create one so everyone who buys one of their homes must be part of the HOA. You don't get to opt out. If you don't agree to be part of the HOA then you don't get to buy a house.
For places which don't have an HOA then yes, you have to canvas your neighbors to see if they're interested then go through the steps to create one.
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Developers are often the reason why an HOA exists. Let's say you acquire a tract of land and want to build say, a dozen houses. Unless your tract of land has roads bordering on all sizes, you're going to have to create streets and roads. Now you've got a problem - you
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I live in New Orleans....you just described half the houses here, and it's charming.
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I still can't quite get it in my head how HOA's are legal...if YOU own the property, yet THEY....not the elected city govt can tell you how and what to do with your property....etc.
The mechanism by which the HOA is made legally binding upon the property owner is through "Covenants, Codes, and Restrictions" (CCRs) that are made a legally-binding part of the deed for the property. The developer initially owns the property, and can therefore add the CCRs to the deed. Each subsequent property buyer, in order to complete the purchase of the property, has to agree to the CCRs that are part of the deed.
Dependin
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And the way homes in poor neighborhoods are taxed at roughly twice the rate of those in rich areas [washingtonpost.com] also seems extremely unjust to me.
Re:Finally something is done for the tenants (Score:4, Informative)
The complaint filed today fills me with joy! Yes, it *is* nice to see government working for people like me, especially in DC where us residents have far, far less voting rights than normal Americans, because DC is not a State, with proper House and Senate Representation. And ironically people like me who have worked for the Federal government, possibly as a contractor, with all the rules and clearances, gave up our voting rights when we moved to DC, (and that sticks if that's your last US residence and you vote absentee from another country).
The gorgeous complaint document filed today [dc.gov] leads with a list of the apartment companies charged. The Cartel. This collusion to increase rent makes me sick, having leased apartments from two firms on this list, and knowing how many buildings are covered by the cartel in all the nice 'hoods. I wonder what the odds might be I'd get some rent money back. Just to give you folks an idea as to how many buildings these private equity companies own, here's 4 of the companies that I am most familiar with, (and their buildings):
- BOZZUTO [bozzuto.com]
- EQUITY RESIDENTIAL MANAGEMENT [equityapartments.com]
- GREYSTAR [greystar.com]
- CAMDEN [camdenliving.com]
Also, all these buildings follow Federal rules, not DC rules. For example, cannabis is legal under certain restrictions within the District, but not within these buildings. That's also true of bringing guns into the building, except for employees of various police agencies of course. The rental contracts are *extensive*. I hope the rents go down and other cities take up their own fight with these private equity companies.
2 choice quotes from the DC Attorney General (Score:3)
"The defendant landlords are some of the largest providers of multifamily housing in the District, and the Office of the Attorney General’s (OAG) investigation revealed that RealPage’s technology was used to set rents for more than 50,000 apartments across DC, in violation of the District’s Antitrust Act."
"With this lawsuit, OAG is seeking to secure financial compensation for the District and residents whose rents were unlawfully raised."
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I realize DC is a special carve out, but frankly you should just be considered part of Maryland and DC should be a district in that state. You should get to vote for a district rep of maryland and vote for maryland senators. Statehood for the DC area seems unnecessary. Especially given how small the area is.
And HUDs FMR is not collusion? (Score:1)
coincidentally rent went up $800 everywhere in AZ (Score:3)
sure seems like collusion when an entire county (Maricopa) gets $800 increases in rent. And all around the same time.
compensation (Score:2)
This is why NYC rents defy supply and demand (Score:2)
NYC is losing population. There are more apartments for rent than ever. AirBnB and its ilk have been banned. And yet rents are skyrocketing. Hmm, wonder why.