Funny way to say "Greed."

The role of any actor in a market is to maximize their profits to the extent that the market allows. This market analysis software is not even a little surprising, large institutional landlords have been doing this for years. The software is not the problem, the market itself is for allowing one of the most essential human needs to be treated like a faceless profit making commodity.

>Few tenants know that such software, owned by a privately held company, has had a hand in rent increases across the country.
In Boston, renter Kaylee Hutchinson said she was puzzled when her landlord—unbeknownst to her, a RealPage client—told her days into the first pandemic lockdowns that her rent was going up. Building staff insisted that the market rate for her apartment was 6.5% higher than she was paying, despite her protests that people were fleeing the city.

Or, you know, everyone is jacking up prices because they like money?

Just let people build as many housing units on their property that they can. More affordable condos means fewer people paying landlords rent anyway.

Fewer renters and more units means less demand for apartments, lowering prices.

I used to work in property management in luxury developments around Central and Kendall until early 2021, specifically using both OneSite (RealPage) and LRO.

I'm reserving this comment for now and will post my thoughts based on professional experience after work.

UPDATED BELOW WITH MY THOUGHTS:

Let me open up by saying that the current cost of housing directly in the city is absolutely absurd. It rests almost entirely on students being bankrolled and by professionals making fabulous money within 5 years of graduating from undergrad. It is a vicious cycle of pay in certain professions rising to match the cost of living, and the cost of living rising to capture roughly the same percentage of those peoples' pay. You have an Ouroborous of price and compensation.

I should also add that while I worked in the industry, I started off in leasing and finished off with a middle-management role that DID include handing out renewals. I am not a lawyer. I am not a massive landlord, though I worked for corporate management company. I was bound by company policy and Fair Housing laws, so it isn't like I could take pity and just decide on a whim to change new lease nor renewal rates at a whim. I am a working stiff just like the rest of you, although my work for a time was in PM. Don't waste your righteous anger on me as if I'm the avatar of the bullshit renters experience. That'd be like yelling at a Walmart cashier because the Waltons are complete and utter fuckheads.

The first thing you need to know is that just about EVERY industry is reporting their data to a third party. Prior to working in property management I used to work in hotels. We used Smith Travel Reports (STR) to report our rate, occupancy, and Average Daily Revenue (ADR). Without getting too deep into the weeds, we'd report our data to STR as would our competitors. We'd get data back that was anonymized for the competitors we selected. We'd know if we were behind on rates, or if our occupancy was far ahead of the competition. I didn't know which comps we were beating, but I saw where we were relative to the competitors I selected. At no point did this report tell me another hotel's data in particular.

The above is an example of a similar practice to what RealPage is doing, but in another industry. Companies share information. It isn't necessarily to collude and fix prices as it is to see what others are able to sell for and act on the market conditions that creates.

In Property Management, we gather data in a few ways beyond YieldStar & LRO. We do our own market surveys, for example. In Central we had a running email thread among competitors to report the basic data: tours, leases signed, occupancy, average rate by unit type, and any current specials or concessions. Multiple companies participated that I'm declining to name. This email thread went out every Monday, and everyone would reply-all with the requested information.

This email thread arose out of the desire to get away from making the same phone calls every week to the same competitors. Yes, we were doing it among ourselves even without a third party. In fact, I'm almost certain it is still done to supplement what people are getting from YieldStar and LRO. Besides, LRO and YieldStar are only as good as the data put in. One of my responsibilities once I hit management was to enter our market survey data into LRO manually.

If another property didn't disclose anything when I called or if they weren't a part of the Monday email, I could pull all sorts of information directly from their website or make some pretty reasonable inferences. Once I know the building's unit count, all it takes is simple math to see their occupancy. They're going to advertise their specials. They're listing their rents, so I can find the average by unit type. The only thing I can't pull is their actual traffic, but I can get the net change in availability week-to-week once I've started going through things. What I'm saying here is that I can find out an awful lot about the market and make a report on it that doesn't give pricing recommendations, but does show where opportunity lies. In fact, that's exactly what I did at one point with an Excel spreadsheet. I could and did find all of this information on my own, even if it was less efficient.

My report (again, imperfect but fairly accurate), also gave the market share. If my competitive set has 1000 total units (just throwing numbers out for the sake of discussion) and 250 of them are mine, baseline performance should be having 25% of the total occupied units in this comp set be mine. If I have less, I'm underperforming in occupancy. If I have more, I'm doing better than my competitors in that regard. Average rent on its own controls for market share, but combined with market share gives you who the king of the comp set is.

Yes, the article mentions that some companies are willing to take hits to occupancy in exchange for better overall revenue. In Boston & Cambridge, though, I firmly believe that's a false dichotomy. The demand absolutely outstrips supply. It does it to such a degree that I could consistently run 96-98% occupancy, and that's only because corporate would require or LRO would recommend pricing the remaining units sky high. High occupancy and incredibly high rents are absolutely compatible. No company wants to get to 100%, though, because that means that rents at some point were too low (from their perspective).

Also regarding LRO's recommendations, they were all reviewed at the corporate and property levels. There is a weekly call with revenue management to go over LRO and make adjustments to the recommendations. Do we think it is too aggressive? Override prices downward. Do we have some new tip on the market like a large number of new hires for a company or that seasonal postdoc influx? Override prices upward. LRO is a recommendation, but not carved in stone tablets handed down from the mountain.

There's also the collusion issue. I want to stress again that I am NOT a lawyer, no matter how much my family wishes otherwise. It isn't a question of if collusion is happening. The question is to what degree, and when that becomes problematic. Everyone gathers competitive intelligence. That's not even remotely up for debate, and it isn't necessarily an illegal practice. Why can Joe Renter know what UltraLux Seaport is charging, but AlsoLux Seaport can't? That's publicly available information. It HAS to be public, because the number of people renting without any consideration of cost is infinitesimally small.

I can somewhat see the argument for collusion. Everyone knows what everyone's doing and prices accordingly. On the face of it, that's problematic. What I don't see is how things can be priced without government decree if nobody knows that the market is actually like. I don't see how making pricing decisions based on publicly available information rises to the level of actionable collusion. Meeting in a smoky room and sharing what each company wants to do but hasn't announced? Now THAT'S collusion.

I know I've rambled a LOT here, so I'll try and bring things back home:

• Business intelligence is nothing new and a standard practice in multiple industries.
• A human being can do what LRO / Yieldstar does, just not as perfectly. The problem has always been there.
• LRO and Yieldstar are generally trusted, but real management companies understand that not all market conditions are necessarily captured, hence weekly calls to discuss what is being recommended and if it should hold.

This is going to open me up to all sorts of criticism, so I'm going to head that off here as well:

• I am not a free-market evangelist. I'm actually strongly in favor of rent control or mandating higher percentages of income-based housing in new developments.
• I believe that rampant building without income restricted housing just means that the well-off will continue to take supply from those who truly need it AND apply upward pressure on pricing for lower cost units as a result. I have seen this both as a tenant and as somebody in the industry. BUILD INCOME RESTRICTED HOUSING FIRST.
• My remarks above are not an endorsement of the way things are done. They're a look under the hood.
• I have fought with Revenue Management more than once on the recommendations the software has spit out. Sometimes I win and sometimes I lose. Sometimes we won't know either way until hindsight kicks in.
• Pretty much everything RealPage folks are quoted as saying in this piece makes them out to be total pieces of shit. Anyone who says what they do is a total piece of shit and should be treated as such.

AMA I guess. I'm going to bed, but I'll answer to the extent of my knowledge and experience in the morning.

I’m sure the fact that we’ve been building housing at a rate slower than the city’s rate of population growth for decades has nothing to do with it

It's almost like real estate is a grubby, mercenary business that attracts the dishonest.

End single family zoning ffs

This feels so wrong but at the same time so long as landlords maintain control and are making the decisions at the end of the day, just giving advice (however manipulative) can't be illegal, can it?

There is frequently confusion that people who own properties to rent are doing this out of their interest in providing housing to strangers at a minimal profit or weakest investment for them. They are not. Unless renters are renting from a relative, you will pay market price. People put emotion into the rent filter. No different than buying groceries in a volatile economy.

Landlord bill go up like everything else.