Eh. Is it collusion to look at the prices for similar properties on craigslist/zillow and then set your rate accordingly? Is it collusion to pay someone to do that part for you? My initial reaction was that yes what they're doing is collusion, but in a supply limited market, prices going up due to market pressure is the same thing.

Essentially isn't the company at this point just acting as a market maker, by figuring out the market clearing price where as many units as possible are filled at the highest price?

No, because a true market maker will decrease the price if needed to complete the transaction. In this real estate pricing collusion, the software encouraged landlords to keep their units empty rather than reduce price as needed to achieve capacity. This only works if everyone else does the same aka. collusion.

Occupancy is important, but price per square is more important. What will make the most money in the long run? Having a unit sit vacant an extra 2 months at a higher price might be more profitable than "completing the transaction" at a low point in the market.

> Having a unit sit vacant an extra 2 months at a higher price might be more profitable [...]

You can only be certain this strategy works when you know the competition is doing the same. If you have a formal arrangement to coordinate pricing with competitors, you are deep in collusion territory.

that is a very easy price to calculate, and if you've done the calculation, you've noticed that landlords are not being realistic about things.

at this point, a lot of them are not adjusting rent down because it will reflect on their property value, which is an additional hidden variable in the equation.

It should not be profitable to keep property empty. It is a drain on society.

Here is a fun factor. A property's value is largely driven by how much rent it can bring in and its loan is based on that value. If rent goes down enough it could effect the value and ultimately the loan which is premised on its value. Nobody wants to be the bank with a 5M loan on a 4M property. In fact normally they don't want to loan more than 70% of the value of the property.

https://www.c-loans.com/loan-to-value-ratio-for-commercial-l...

>It is a drain on society.

This does not factor into any calculation about housing prices, unfortunately, and will likely never be factored in until there's a literal revolution (highly unlikely).

Just like pollution, the homeless are either ignored or bulldozed out of sight and out of mind.

> Having a unit sit vacant an extra 2 months at a higher price might be more profitable than "completing the transaction" at a low point in the market.

Yes. And it is also amoral. There is a limited supply of housing. Holding it vacant is restricting access to one of the very most critical human needs there is. It might look better on the balance sheet but it is worse for humanity. Thus, the need for regulation and legislation that prevents this sort of thing.

> So the correct action would be to introduce cost for keeping units unrented.

There's already a cost of keeping them unrented - the loss of rental revenue.

If you've ever tried to sell a house and had it sit vacant for months when trying to find a buyer, you'd find out about that cost.

> There's already a cost of keeping them unrented - the loss of rental revenue.

Right. And observing the market shows us that this cost is too low.

Why would I ever sell an empty unit if it appreciates in value faster than it costs me to keep it? Provided that I have no better opportunity to use that capital, which must often be the case.

If you need capital it's another story. But even in case of a single home, the fact that you can sit on it for months instead of lowering the sale price means it's to cheap to keep it if you don't need it.

There is also the fact that having some vacant unit across a large portfolio reduces profit and the tax bill on the units that are being rented out.

If they’re doing it to maximize their long-run profits, that will tend to maximize their long-run income taxes due as well.

I'll take a shot and someone with domain expertise can opine on my low-effort take.

In kaibee's first paragraph, there's a missing question: Is it collusion to pay someone to set rates accordingly by using information and decision-making processes you yourself could not have gotten on your own?

I think this is the key. E.g., looking at Zillow could tell a given landlord that they need to charge more rent for a given unit. But looking at Zillow couldn't tell that same landlord to, say, keep that unit vacant for months in the hopes there is a multi-landlord unit-vacancy plan to increase prices across a city. And IIRC, these kinds of decisions have been made by a lot of landlords in a lot of these markets.

In fact, if I'm a landlord, I'm not going to take that risk unless I've got a good reason to believe that a) the software I'm relying on is used by the vast majority of other landlords, and b) the software is advising and strongly incentivizing everyone else to do the same thing. (And possibly that there are penalties if the other landlords don't make that move.)

I think the problem here is that marketplaces need to be neutral and regulated as public utilities.

The same thing happens with amazon stealing vendor business, and arbitrarily banning people without legal recourse. When you set the market, you can't be allowed to dictate who participates.

Its the same core problem. These private marketplaces grow to the point where everyone depends on them and then shenanigans ensue

I agree. I think the crucial functionality is the common knowledge of common knowledge that no one else will renege on the deal. That’s effectively cartelization.

Part of this may be driven by the laws that prevent landlords from evicting tenants or raising rates.

The US court system is really dropping the ball here. Simple evictions for nonpayment should take a week and almost no legal costs. Instead, I am looking at 6+ months of lawyer and court costs in some of the states.

And this is at hotels. Our solution? Force all hotel guests to checkout before reaching the statutory number of nights that afford them tenant protections. Which is massively inconveniencing responsible people, all because the government wants to protect scammers.

No, no they shouldn't. We don't really want folks who lost their job last week to be out this week with all their possessions on the sidewalk. Everyone should have the option of a court date and some degree of legal help before ending up on the street in case they are getting cheated even if some people misused this.

It is absolutely impossible to ensure good faith and lawful process by having the landlord make an unverifiable assertion followed by the cops kicking people out a week later. This isn't enough time to schedule a hearing let alone have the counter party getting representation. Furthermore factually society as a whole is better off as a whole if we have fewer people with crashed lives living like hobos on the sidewalk so its advantageous for such a process to be orderly and slow enough that people land somewhere other than flat on their back.

People staying long term in hotels is an extreme edge case we shouldn't optimize the rest of the system for.

What the law is telling you is that if you offer long term tenancy you are a landlord even if you call yourself a hotel. This and your decision not to get into the landlord business both seem to me perfectly acceptable. To quantify this let me ask you a question.

How many of your folks staying over 30 days were planning on staying indefinitely? If the majority of the folks planning on staying 30 days were planning to leave in 90 perhaps the threshold should be increased to accommodate contractors and students who might need accommodations.

If most of the folks over 30 days are lifers then maybe the threshold is already accurately set.

> We don't really want folks who lost their job last week to be out this week with all their possessions on the sidewalk.

Cool, then that “we” (government, voters, taxpayers), should pony up for all the time that a tenant ends up staying and not paying.

Otherwise, what “we” want is for a certain subset of society to subsidize not having people out on the sidewalk, as opposed to having it come from government coffers where everyone’s taxes would pay.

Another option is for the government to provide housing for people.

>It is absolutely impossible to ensure good faith and lawful process by having the landlord make an unverifiable assertion followed by the cops kicking people out a week later. This isn't enough time to schedule a hearing let alone have the counter party getting representation.

I disagree. We have computers, broadband, and electronic databases. It takes 2 minutes to prove if you did or did not pay someone.

Hell, in my case, I have an email from the squatter explicitly stating they will no longer pay unless they get a reduced price AND that they have done this to other hotels in the past AND that they waited until the statutory time passed so they could take advantage of eviction wait times.

Most of the negative things that can happen to a business aren't covered by uncle sam.

Broadband and computers make it easier to transmit an unverifiable assertion prepared wholly by one side. The way you verify this is you have a human being listen to both sides.

Without this we wouldn't capture

- failure to keep proper records

- recording the payment in the wrong account

- inappropriate or illegal charges

- rent being legally withheld

- lost or stolen money orders including stolen by employees of landlord

- disputes over whom was supposed to get paid in situations where custody of property was disputed

- malicious lies

Again its pretty clear that your accommodations for the night and your home ought to be treated substantially differently. For 36% of American households their home is the linchpin of their life and livelihood. I don't think we ought to undermine a process essential to the lives of tens of millions of people to help out a couple of hundreds of low rent hoteliers deal with squatters.

We already normally deal with hotel guests who won't leave substantially different then tenants in most states usually by establishing a threshold beyond which one goes from A -> B and a simple process by which one removes unwanted guests different from the process to remove tenants.

I do have to wonder if complainants are dealing with situations arising effectively providing long term housing in fact if not in law eg slum level accommodations rented cheaply by the week or if the process of removing non-paying guests in hotels in your state is just well and truly broken and instead of fixing it you are suggesting breaking the process which tens of millions rely on instead for the benefit of mere dozens of hoteliers

> Broadband and computers make it easier to transmit an unverifiable assertion prepared wholly by one side. The way you verify this is you have a human being listen to both sides.

And this should not take months. Otherwise, all this technology society has developed is all for nought. You can literally take a laptop or phone into court and login to bank accounts to prove payment. If someone wants to bribe or hack into bank servers and commit fraud, then obviously we can get higher powers involved at that point.

> I don't think we ought to undermine a process essential to the lives of tens of millions of people to help out a couple of hundreds of low rent hoteliers deal with squatters.

I agree, and the government should pay for it, not “a couple of hundred low rent hoteliers” (not sure what purpose the denigrating adjective serves, as if a business providing lower priced services is somehow bad for society).

> instead of fixing it you are suggesting breaking the process which tens of millions rely on instead for the benefit of mere dozens of hoteliers

I never suggested “breaking” the process. I suggested fixing the legal system, which is clearly understaffed or overly bureaucratic. And it helps everyone, not just a “few dozen hoteliers”.

What you (and current politicians) seem to want is a “few dozen hoteliers” to provide housing for free for the benefit of all taxpayers, allowing you to have lower taxes.

> I never suggested “breaking” the process. I suggested fixing the legal system, which is clearly understaffed or overly bureaucratic.

That bureaucracy is called process and it exists for reasons that are out of scope of your deadbeats.

> I never suggested “breaking” the process. I suggested fixing the legal system, which is clearly understaffed or overly beauricrafic.

There is no way to fix the process that would allow you to remove a long term tenant in a week and there isn't a political will to sink millions to billions into staff to allow such matters to be handle them much more expeditiously. Society wouldn't experience a net gain and has finite resources.

> not sure what purpose the denigrating adjective serves

It serves to identify the nature of the problem. You have a problem in that you are offering long term tenancy to people who don't qualify for long term tenancy other places. You are trying to do that by pretending its short term tenancy and are frustrated that the rules of long term tenancy applies. Instead of calling the cops to roust a trespassing guest who didn't pay for this 3rd day you are having to evict folks who can't or wont pay after months or years.

You have deliberately adopted a known broken niche and in a way are providing a valuable service to society and are pissed that society neither wants to fix the niche nor acknowledge that value.

> There is no way to fix the process that would allow you to remove a long term tenant in a week and there isn't a political will to sink millions to billions into staff to allow such matters to be handle them much more expeditiously. Society wouldn't experience a net gain and has finite resources.

So then society can pay the rent if it is determined that the tenant is not paying. Problem fixed.

The reason this does not happen is because society wants to get away with sticking certain subsets of the population with the cost who don’t have the political capital to fight it.

This is untenable it would incentivize landlords in your position to carry nonpayers indefinitely at everyone's expense. All your problems aren't societies to fix.

It is if society is the one enforcing the requirement to keep someone on my property.

Also, the simple solution is that the government pays the rent only for time after the business files an eviction claim with the court. After that, the ball is in the court’s court.

Society doesn't pay folks to install fire doors or sprinklers even though it makes you have them. It doesn't pay for the requirements for a restaurateur to follow food safety guidelines.

Not analogous to litigating theft.

There is no analogous situation in law or American history in which private loss is put upon the public merely because the public made you go through proper procedures.

The tenant caused your loss and you can't recover it from the people. Any such procedure would entirely break the model whereby landlords select tenants based on the expectations of remuneration. If the entire government could be made to bear the cost upon request of unpaid rent landlords would be substantially less apt to be careful in their selection.

>If the entire government could be made to bear the cost upon request of unpaid rent landlords would be substantially less apt to be careful in their selection.

This would be a good thing, usually people denounce it as “discrimination”. It’s why you “need” a credit card to stay at a decent hotel, it is a credit check by proxy because the hotel operator cannot count on the police to do their job and remove people.

These types of government policies only end up hurting poorer people who have no credit.

If we are going to go out of pocket 10s of billions of dollars per year I'd rather it be in help to keep people in their homes rather than largess paid out to a class of people that by and large are already in the top 10%.

In general, all of these "protections" just result in higher costs for everybody.

Somewhat, some people suffer more costs than others. Scammers benefit from the protections, and responsible people shoulder the cost.

Politicians should be providing housing to people if they want them to not be homeless, or paying the housing vendor. It’s easier to get elected by promising housing and low taxes though, and punt the costs onto select portions of the populace who play a game of trying to determine who is going to use the laws to scam them, which ends up resulting in discrimination.

What do you think would happen if the government offered free middle class housing?

Conversing about anything involving the term “middle class” without an extensive definition of it is a waste of time.

Obviously, free too much of anything skews incentives. But the consequences of homelessness should not be borne by select portions of the population.

We all know what the middle class is.

You made an investment decision (allowing hotel guests to legally become tenants) and it ended poorly for you. Why should the government bail you out for “almost no cost”? The legal system doesn’t exist to insulate you from risk.

It did not use to take 6+ months to evict a non paying tenant. This is a post Covid phenomenon. That is an insane amount of time to prove that someone did not pay you. How can anyone trust in the legal system if such a simple thing takes so long to get resolved?

The legal system should exist to remedy legal disputes, for everyone, in a timely manner. Whether it be a big business or a small business or a personal dispute.

A clogged legal system where simple disputes take an inordinate time to resolve is a sign of decay and corruption. You end up with people losing trust in the system, so now you have an incentive to take advantage, because others are going to take advantage of you. And then it becomes a game of who you know (more than it already is), or taking matters into your own hands.

> Essentially isn't the company at this point just acting as a market maker, by figuring out the market clearing price where as many units as possible are filled at the highest price?

No, because the software was recommending leaving units unfilled. Rather than being like doing market research on craigslist, using this site is more like everybody hiring the same consultant to set their prices and vacancy rates, which does feel a bit like laundering the collusion.

They weren’t merely using price information to suggest rent. They were forcing landlords to accept the proposed rent 90% of the time or greater (and providing a lower rent required approval from the firm).

That’s the collusion — preventing landlords from lowering prices from competitive forces.

> They were forcing landlords to accept the proposed rent 90% of the time or greater

If this were true, it should be easy to find the terms of the contract the spelled this out. They didn't. What they found instead what an out of context quote that vaguely sounds like that, but is more likely expressing that if you want to profit from our recommendations, you actually need to follow them.

The natural result of a free market for an essential good with inelastic demand and a finite supply is collusion in result if not in fact making owning the limited supply increasingly profitable pulling more money into the system until eventually a handful of major players control most of the space while lobbying to make competing options increasingly hard to build. Eventually it becomes profitable and logical to consolidate players until you are either renting from Rent INC or Homes4U if you rent an apartment. Single family homes see a related raise in price as supply outpaces demand leading the top 10% in wealth including both well off young/middle ages people and old folks investing wealth earned over a lifetime to invest in rental homes competing with people who have income but little wealth driving the cost further out of reach for people who aren't already home owners.

Because this benefits half the country we ignore the fact that its sucking the life out of the other half and celebrate the increase in household wealth for middle class folks. Meanwhile another group of vampires is waiting to suck the life out of these mom and pop landlords as they get old and overpay for medical services. Because grandpa lives to 95 instead of 90 there is no generational transfer of wealth other than to the financial services industry which acquired grandpas rental house cheap when he ran out of money at 75 and his house even cheaper at 90 in a reverse mortgage so he could stay in his house for a few more years.

40 years later housing medicine and education have broken the middle class even though the first increasingly builds tiny shitty apartments which fall apart, the second increasingly relies on nurse practitioners and other less than doctors, and the latter pays adjunct professors like burger flippers. Somehow even when those industries absolutely dominate normal folks paychecks not much of the money even seems to stick to the hands of the folks actually doing the work.

To say that prices are the result of a free market is both true and meaningless. Unmanaged free markets aren't really good for anything.

Research vs racketeering. The distinction is that it is illegal and that is the entire distinction. So it matters what society deems acceptable behavior for businesses. The line is arbitrary, but well defined in case law.

By colluding to set prices to a certain level they are implementing a monopoly pricing scheme. Otherwise competitors would set their prices lower to sell the most housing. As it is, housing is going vacant, but profits are higher because of increased price.

The difference is the software/forums encouraged the landlords to all leave more units empty then they normally would to raise prices.

In todays housing shortage enviornment I would think that this is really going hurt them with the jury.

> The difference is the software/forums encouraged the landlords to all leave more units empty then they normally would to raise prices.

Well, in a working market, you'd have more supply get built up by developers and those landlords would lose pricing power. Or it could still fail in the other direction, people would find the area too expensive and find jobs elsewhere. I think my take here is if the landlords each had, competent, ruthless capitalist employees, they would end up setting the price just as high as RealPage, because RealPage doesn't actually have any kind of mechanism to enforce compliance with the cartel structure.

> because RealPage doesn't actually have any kind of mechanism to enforce compliance with the cartel structure.

Actually as others have noted, they do. Don't use their prices at least 80% of the time, and you get kicked off.

Meh. The answer is Yes. And this phenomenon goes FAR beyond real estate recently. I wrote about it here: https://magarshak.com/blog/?p=385

Seems completely different imho. The patent issue if triple damage for knowing infringement, E.G. Not acting on information.

The practice of designing around existing patents is actively encountered.

The USPTO insanity isn’t a model that should be replicated.

True, it is so difficult to work around that by using your own device/network.