from Hacker News

FBI raids Atlanta corporate landlord in probe of rental market price fixing

by byproxy on 6/5/24, 2:35 AM with 266 comments

  • by FesterCluck on 6/5/24, 5:49 AM

    Here's how this works:

    Illegal collusion and price fixing happens when owners of competing companies communicate to set prices.

    Apartments prices were historically a highly volatile compared to their lease lengths. One would have to own a majority of the apartments in a market to gain the data necessary to know things like upcoming tenant renewals, apartment renter influx/outflow, etc to combat things like mass-tenant exodus to a nearby apartment complex offering $100 less rent per month. This industry has been historically very competitive.

    Realpage does the colluding for them inside a database and whispers back "here's our number".

    How are non-participating properties punished? Debt Servicing. Try getting business loans for these properties without running Realpage's tools.

    Look at the investors and board members of RealPage, InvesTran, etc. and those in the property management companies. They are a very small circle hiding normally illegal activity behind algorithms.

    Encrypting or obfuscating illegal communications doesn't suddenly make them legal. Neither does charging money for the privilege.

  • by davidw on 6/5/24, 3:46 AM

    Both things can be true:

    * If this software system managed to add, say, 1% to hundreds or thousands of people's rents... that's a lot of money and the company probably deserves what's coming to them, civil or criminal.

    * Housing prices are still set by supply and demand. You can't charge LA prices in Atlanta no matter what kind of fancy scheme you run.

    People want a bogeyman so bad for the housing crisis, but it's mostly stuff like this, where local NIMBYs stop homes from being built:

    https://bendyimby.com/2024/04/16/the-hearing-and-the-housing...

    That doesn't mean this company isn't gouging people a bit too, though.

  • by pm90 on 6/5/24, 3:44 AM

    The company is RealPage and they are an online tool for setting rents.

  • by BMc2020 on 6/5/24, 4:38 AM

    We would like to share with you our concern over recent structural developments that the Blackstone Group L.P. (Blackstone) helped to instigate whereby unprecedented amounts of global capital are being invested in housing as security for financial instruments and traded on global markets, which is having devastating consequences for people.

    As one of the largest real estate private equity firms in the world, with $136 billion of assets undermanagement...

    That was in 2019 when this report was written. It's now over a trillion.

    In neighbourhoods heavily invested by private equity firms including Invitation Homes, more than 7,400 families and individuals are evicted every day. In Charlotte, North Carolina, for example, it was found that in 2013 Invitation Homes filed eviction proceedings against 10 percent of its renters.

    Invitation Homes is part of Blackstone.

    Blackstone is by no means the only financial actor adopting the business model mentioned above. However, because Blackstone is a leader in implementing the new residential real estate business model and one of the largest global actors in residential real estate...

    https://www.ohchr.org/sites/default/files/Documents/Issues/H...

  • by kderbyma on 6/6/24, 12:50 AM

    Most of Canada is being actively price fixed by a handful of large real state companies that have purchased huge patches of housing and tend to do the minimum to maintain or improve and act more like litigious predators who price fix and remove all ownership from the experience

  • by sho on 6/5/24, 3:50 AM

    This is happening in Australia as well. I am looking forward to a legal decision that SAAS-mediated collusion is still collusion.

  • by jmyeet on 6/5/24, 4:04 AM

    Several things can be true at once.

    The big problem is we've financialized housing, a basic human necessity. This is wealth extraction and, really, state violence. People buy into this model because they think they're building wealth. For the vast majority of people they own only their own home so they're not really growing wealth at all. After all, they can't just sell their house. They have to live somewhere.

    And no, this isn't a supply issue. We have enough housing.

    Second, landlords can form an effective cartel by all using the same tool that spits out the same numbers to all of them. If a company bought up 80-90% of the housing supply and jacked up the prices we'd all recognize the anticompetitive behavior. There's simply one level of indirection here. It's naive to think that cartel-like behavior is an unintended consequence.

    But taking out this one player won't fix the underlying problem.

  • by api on 6/6/24, 2:27 AM

    All these schemes can only really be effective if housing supply is insufficient to meet demand. If there is plenty of supply it’s very hard to price fix a market.

    The cartels and PE investors are investing in NIMBYism. It’s a bet that resistance to construction will continue to keep supply artificially constrained, forcing prices up.

    If that resistance is removed these investments will underperform.

  • by kristofferR on 6/6/24, 10:07 AM

    Great 8 minute documentary that explains the issue with RealPage and features interview with several of the suing State Attorney Generals:

    https://www.youtube.com/watch?v=cwlwrZst7d0

  • by objektif on 6/6/24, 2:06 AM

    Again people seem to not be exposed to wtf is going on in the rental market. In my building I have seen prices of the same unit move by 10% within a few days. According to my management this is due to the “software” they are using.

  • by aetherson on 6/5/24, 3:24 AM

    No.

  • by fsargent on 6/5/24, 3:52 AM

    If people are still renting the apartments, and the vacancy rates aren’t going up, (which in the United States, they’re not), then no, one company isn’t driving rents up.

    We’re just not building enough housing.

  • by ineedaj0b on 6/6/24, 6:16 AM

    the collier company owns many college apartments and bought pretty much every single one around the university of Florida. I'm almost 90% certain they've raised prices higher and higher because they are the only game in town. I don't have the investigative chops to do a takedown, but if someone is reading this and wants a lead for a story, well here it is.

  • by Animats on 6/6/24, 5:03 AM

    As the FBI should be doing.

    Sherman Antitrust Act:

    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 hereby declared to be illegal.

    Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor [. . . ]

    This is a classic Sherman Act violation - multiple companies explicitly colluding to raise prices.

  • by nxobject on 6/6/24, 9:57 AM

    Lina Khan seems to have had a lot of preliminary simmering in the background when we weren’t looking - the FTC is on a roll revealing its investigations, and perhaps just in the nick of time.

  • by rjejs on 6/5/24, 3:25 AM

    Well if at least not to blame then being used as laundering for price fixing

  • by maximilianroos on 6/5/24, 4:14 AM

    If landlords were restricting supply in order to increase rents, we'd see higher vacancy rates in locations with higher rents.

    But we see the opposite — NYC has a vacancy rate of 1.4% and peak rental pricing.

  • by pabloarteel on 6/6/24, 2:47 AM

    I'd love to see the economy working on sound (non-inflatable) money, as I assume this would reduce people going in to real estate just to keep their money from losing value.

  • by tootie on 6/6/24, 1:49 AM

    This sounds less dramatic than the headline. They executed a search warrant for some information. Doesn't sound like they're close to charging anything.

  • by ChrisArchitect on 6/6/24, 2:19 AM

  • by ChrisArchitect on 6/5/24, 5:47 AM

  • by CivBase on 6/5/24, 4:03 AM

    Sounds like RealPage makes it easy for landlords to identify market prices so they can charge as much as the market will bear. That's arguably scummy, but I don't see any evidence that RealPage is somehow affecting the market price itself.

    The market price is as high as it is because we have a housing shortage. RealPage just helps landlords take advantage of an underserved market.

  • by zxxh on 6/6/24, 1:01 AM

    I’m actually a landlord and my management company literally just has a list of all the rents being paid in my condo complex. Once I saw that I basically gave on my job as a SWE. We are just working for our landlords, you can’t win.