San Francisco Supervisors Approve Ban on Rent-Setting Software (cbsnews.com) 91
San Francisco's Board of Supervisors has approved a first-in-the-nation ordinance banning landlords from using certain software and algorithms to set rents. The measure, proposed by Board President Aaron Peskin, passed with a 10-0 vote and targets companies like RealPage and Yardi.
The ordinance prohibits the sale or use of "algorithmic devices" that analyze non-public competitor data to recommend rents or occupancy levels for residential units in San Francisco. Violators could face civil penalties up to $1,000 per infraction. Proponents argue the software exacerbates the city's housing crisis by enabling artificial rent inflation. RealPage defended its product, stating it "benefits both housing providers and residents" and that customers can reject price recommendations. The ban follows federal scrutiny of algorithmic rent-setting practices. A final vote is scheduled for September 3.
The ordinance prohibits the sale or use of "algorithmic devices" that analyze non-public competitor data to recommend rents or occupancy levels for residential units in San Francisco. Violators could face civil penalties up to $1,000 per infraction. Proponents argue the software exacerbates the city's housing crisis by enabling artificial rent inflation. RealPage defended its product, stating it "benefits both housing providers and residents" and that customers can reject price recommendations. The ban follows federal scrutiny of algorithmic rent-setting practices. A final vote is scheduled for September 3.
loophole (Score:5, Interesting)
The ordinance prohibits the sale or use of "algorithmic devices" that analyze non-public competitor data to recommend rents or occupancy levels for residential units in San Francisco.
As long as the data can be found publicly somewhere it is public data. Even if an individual would have to look in dozens of places to compile the data... it is still publicly available.
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I hate landlords as much as the next guy, but how is this any different than when I'm selling an old GPU and I look at eBay's "trending price" to figure out what I should ask for it? Yeah, some algorithm determined that, but it's still based on what the free market is willing to pay. It's not truly a feedback loop because if buyers don't want to pay that price they'll make lower offers and if sellers accept them, that will ultimately bring down the trending price. Furthermore, if a bunch of desperate sel
Re:loophole (Score:5, Interesting)
California's housing market is the result of housing supply not keeping up with demand. If you want cheaper housing costs, build more housing.
We don't have enough water for more housing. The state has mandated that cities and counties build more housing -and is penalizing them for not doing so. But... the law says you cannot build without providing services (water, sewer, power). We don't have enough water to provision new buildings, so new construction goes on a waiting list for "water credits" to become available.
In my area, the water company is paying annual fines because they pump more water from the rivers and aquifers than they are allowed. [They are OK with this, because fines are a cost, and they just raise rates to cover it... and profits are legally defined as a % of cost, so more cost = more PROFIT.] It is a big enough problem that the county has tried to buy out the local water company - rejected: not for sale. The county tried to force the sale by eminent domain - lawsuits are in progress [lawyers are a cost = higher water rates = more PROFIT!] Voters agreed to fund a new desalination plant - the water company is suing to NOT build it [more lawyers = more costs = higher water rates = even more PROFIT!!]
-apologies for ranting. This whole water/housing clusterfuck bugs me.
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>We don't have enough water for more housing.
Oh man don't go saying that in r/bayarea or r/sanjose on reddit. Those are fighting words.
I completely agree with you though. The available watershed in this part of the state is so low (Mostly Sac/American rivers fed by Shasta snowmelt) that saltwater is starting to creep up the Sacramento Delta. LA should really not exist, at least not at its current size.
I've been saying this for a while, but we need to start developing other areas of California that do h
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The available watershed in this part of the state is so low (Mostly Sac/American rivers fed by Shasta snowmelt) that saltwater is starting to creep up the Sacramento Delta. LA should really not exist, at least not at its current size.
LA would be fine if they could get their act together on water management.
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>We don't have enough water for more housing.
Oh man don't go saying that in r/bayarea or r/sanjose on reddit. Those are fighting words.
I completely agree with you though. The available watershed in this part of the state is so low (Mostly Sac/American rivers fed by Shasta snowmelt) that saltwater is starting to creep up the Sacramento Delta. LA should really not exist, at least not at its current size.
I've been saying this for a while, but we need to start developing other areas of California that do have water and give companies incentives to move there. The area between Crescent City and Eureka/Ferndale have enough flat buildable landmass (Bigger than San Jose), and enough water between the Smith and Eel rivers to sustain a pretty large population, at least equal to the Bay area. It's really only missing better flood control, and logistics. It needs a better highway on par and connected to the 5. It also needs a bigger airport, and maybe even a rail system.
The problem with that is that the water is likely already owned by some other water district. The whole state is low on water. Basically, most of the state is a desert unless it's very well irrigated and we have been doing that for so long that we have ran out of supply. The environazi's won't allow any more storage to be built so what water we do get just rushes out to sea. The state is a shit-hole now days and getting worse by the hour.
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Who told you that? Because a person needs only 50 liters (13.2 gallons) [westerncape.gov.za] of water per day for domestic uses, yet the average San Franciscan uses around 37 gallons. [sfgov.org] So by my math, San Francisco has enough water for almost 3x the current population.
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I suppose that can happen if you don't poop every day but I've done the "if it's yellow let it mellow" and the odors were never very strong. The only real issue was the yellow crystals that formed along the water line that required scrubbing.
They make shampoo for dandruff, or try hypochlorous acid to prevent it.
Communism marches on (Score:2, Troll)
It is not any different, and those "Supervisors" know this. But they also know, that landlords are a minority, and their vote is not important in comparison to that of the renters.
The renters, who are too dumb to realize, that any such oppression of the seller (of anything) leads simply to further increases of the prices. Which
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Do you really think supermarkets, and water utilities don't use algorithmic means to set prices? The only difference is there is a lot more competition in the rental market than supermarkets, and utilities. And landlords pay a lot less in political donations.
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This is more akin to how Bose enforces the exact $399 price of its QuietComfort Ultra earbuds at every single retailer.
Except worse. It's open collusion via algorithm. The law just hasn't caught up yet. Based on this article, it seems it finally is...
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I hate landlords as much as the next guy, but how is this any different than when I'm selling an old GPU and I look at eBay's "trending price" to figure out what I should ask for it? Yeah, some algorithm determined that, but it's still based on what the free market is willing to pay.
If the landlords had a meeting and decided on a high floor for minimum rents, that would obviously be illegal collusion. So, if an algorithm replaces that meeting but essentially performs the same actions as the convener of that illegal meeting, that algorithm would be involved in illegal collusion. The landlords can't share information about what they're willing to charge for rent, whether through direct conversations or via a computer program.
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I worked at RealPage in 2022. I can tell you exactly how it is different:
RealPage and the other rent-seeking algorithm things have a huge contract that all clients must sign. In that, is the biggest antitrust loophole of all time (I think):
> By using our services, you agree to price your listings at or above the price advised by The Algorithm. You must not make any exceptions or discounts for anyone, regardless of merit or marketability.
Then, they get 85-90% (in some locations *100%*) of all apartment ow
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holy shit.
That agreement should be exhibit A at the trial. It's is enough to prove anti-trust violations on a massive scale.
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See my comment here: https://news.slashdot.org/comm... [slashdot.org]
on how RealPage colludes with landlords to artificially reduce affordable supply on a daily, sometimes hourly, basis...
It's extremely unethical.
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I hate landlords as much as the next guy, but how is this any different than when I'm selling an old GPU and I look at eBay's "trending price" to figure out what I should ask for it? Yeah, some algorithm determined that, but it's still based on what the free market is willing to pay. It's not truly a feedback loop because if buyers don't want to pay that price they'll make lower offers and if sellers accept them, that will ultimately bring down the trending price. Furthermore, if a bunch of desperate sellers flood the market with something, that will bring down prices too. We recently saw that happen when Hertz decided to dump the majority of their Chevy Bolt EVs onto the used car market.
California's housing market is the result of housing supply not keeping up with demand. If you want cheaper housing costs, build more housing.
I think that would cross a line if you and other sellers conspired to use a pricing system that took into account each other's available inventory for example or other non-public data. That's a pretty classic price fixing scheme isn't it, with a veneer of "the algorithm did it".
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So long as the fine is less then the profits, it's all gravy to the landlords and Realpage.
Considering our government doesn't ACTUALLY care about anti-trust, this is just standard operating procedure these days.
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because how to do you know if they are using the software or not?
You as a person probably can't find that out (unless you know someone on the inside). A municipality can find out by requesting that information and if the landlord refuses, going to court and doing discovery.
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There's a third scenario you ignore: the landlord lies and says he's not. If he's clever, it would be hard to prove.
Re: loophole (Score:3)
Why couldn't "Rent Advisor" set up an office in, say, Nevada, and advise SF landlords on what to set their rents at?
It's amazing that SF is making use of particular software illegal - what's next, Landlords can't use Windows because of security/reliability vulnerabilities?
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The bill doesn't single out any software program, package or provider. It bans use of "algorithmic devices" -- software -- that fits certain descriptions, including using non-public data to advise landlords on prices.
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And the landlord could create a corporation in Nevada (one of four states that allow anonymous LLCs [wyomingllcattorney.com] to use those services, forward the recommendations quietly to the landlord.
And that doesn't even begin to address out of state owners, which is pretty common in California.
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Loads of software is illegal to use, e.g. malware.
It's not the software itself, it's the collusion that it facilitates.
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Why couldn't "Rent Advisor" set up an office in, say, Nevada, and advise SF landlords on what to set their rents at?
Or Mexico. Or Central America. Or Bhutan.
Good thing there's no nefarious "world wide web" of software!
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Using data from the public internet would be legal. That is like a gas station owner seeing what his competitor is charging and matching the price, which has been going on forever. Of course, my actual payments are about 8% higher than my nominal rent because of added charges. Landlords are learned that they can charge you for things like utilities for public areas without including the cost in the rent. Like a lot of things this is mostly political posturing. Of course, if landlords started sharing data like their actual costs and profit margins that would be another story. In any case this is impossible to enforce, because how to do you know if they are using the software or not?
It's impossible to keep gas station owners from calling each other to discuss what to charge next week, it's still illegal.
You say it's impossible to enforce, but it's not. Price fixing schemes might be difficult to investigate and prosecute, but it happens. This is like another checkbox the government is making you tick off that by itself does nothing, like "I do not use marijuana or illegal drugs [CHECK]", gun please thank you. There is no way to enforce that, there are no drug tests at point of sale peri
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The ordinance prohibits the sale or use of "algorithmic devices" that analyze non-public competitor data to recommend rents or occupancy levels for residential units in San Francisco.
As long as the data can be found publicly somewhere it is public data. Even if an individual would have to look in dozens of places to compile the data... it is still publicly available.
I mean that's fair at least. I know if you run a gas station you can look down the road and see what everyone else is selling it for, but you're not allowed to talk to them about it, to prevent price fixing. Algorithmic non-public competitor data sounds exactly like a back door to price fixing.
Good for them. (Score:2)
Rent gouging 101 (Score:5, Interesting)
If you have 10 available units, and you know 10 people are looking for housing .. each with $100K to spend on rent .. you make only one apartment available. That way the person who rents your unit will pay the maximum amount (more than 9 others are able to pay). Then you make the second uni available and so on. Thus you benefit from artificial scarcity and ensure that 9 out of the 10 apartments got the absolute maximum people can afford to pay. Creating scarcity .. that's the name of the game of any business finance person. Note as engineers we think in terms of maximizing gains via increasing production. Business people figure out how to maximize gains by creating scarcity. Always fucking remember that.
Re: Rent gouging 101 (Score:3)
So when will SF pass a law that requires vacant rental units to be placed on the market within 30 days of previous tenant vacating the property?
Vacant rental properties cost landlords money, a lot more than a landlord could ever hope to boost rental prices by playing such games. If I have a 100 unit apartment complex, every vacant unit represents 1% of my monthly mortgage payment and 1% of my tax obligations. If I keep 10 units vacant to boost rent payments, I need to get 11% higher rent payments on the oth
Re: Rent gouging 101 (Score:5, Informative)
It depends on market elasticity. OPEC frequently causes the price of oil to go up by 20% to 30% just by reducing oil supply by a few percent. So yes, if landlords collude, yes you can easily increase your rental price by more than 11%.
Reference (OPEC caused reduction in global oil production by less than 2% and the price of oil went up by 6% the next day ..Note you can find other graphs proving this effect): https://www.reuters.com/busine... [reuters.com]
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>Vacant rental properties cost landlords money, a lot more than a landlord could ever hope to boost rental prices by playing such games. If
Uhh no landlords do this in tech hubs. They also air bnb vacant units and developers will hold onto condos and airbnb them leaving only a trickle onto the market.
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That assume you are the only person renting units in the area, and therefore you have a monopoly otherwise people will just go somewhere else.
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That's why the landlords collude using rent-setting software.
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Because the RealPage software has the information in the backend database of each landlord's apartment availability numbers and asking rates, the RealPage algorithm informs them each day on how much to set their rents...
Let's say that the market rate is $1200...
Some apartments, it will say "Set your 1 BD to $1500" and all the others it will say "Set your 1 BD to $2800".
For any given searcher searching on that day, only Apartment Complex 1 will seem like an OK deal. More than the $1200 they thought they coul
Weird (Score:5, Insightful)
I still don't understand why this isn't prosecuted as an obvious cartel. You have multiple parties in the same industry (housing) colluding to increase prices for the customers.
Just because the collusion is through an algorithm rather than a handshake in a private booth of a high class restaurant, it's still cartel activity.
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Obligatory "it's a big club and you aren't in it"
Antitrust isn't prosecuted
Wage theft isn't prosecuted
Tax evasion through use of the approved havens at home and abroad isn't even strictly illegal in every case
It's all set up for them, not for us.
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I do so miss George Carlin at times like this...
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That seems like its meaningfully distinct from the backroom handshake of two shadowy figures.
In a poker tournament, everybody knows that in a three way pot when one of the players is all in, the best thing to do (as in prisoners dilemma best) is for the remaining two players to cooperate to maximize the chance that the all-in player is eliminated from the tournament.
Its collusion for sure. It is not, however, an agr
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That sounds like US anti cartel law has a hole in it. Most of European nations have a "anti competitive actions" as focus, not "is there a third party assisting in the agreement or is it direct".
Otherwise you could just channel such an agreement through a law firm. You'd want a written contract anyway, if that makes it legal on top of it.
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That seems like its meaningfully distinct from the backroom handshake of two shadowy figures.
Just because the backroom is online rather than in person?
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It's an even more fundamental problem. Everyone needs housing, just like they need water. It's a limited resource that everyone depends on.
Markets don't work very well for things like that, which is why we heavily regulate utility companies, or have those resources provided by the government. Housing should be the same, heavily regulated at the absolute minimum.
Treating housing as a lucrative business causes a lot of problems.
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>Everyone needs housing, just like they need water.
How delusional must you be to think that not having a house will have you die in similar way that death of thirst, one of the most painful ways to die there are?
Oh wait, amimojo. This is status quo. Carry on.
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Do you think "housing" means houses only, excluding all other types of dwelling, or are you saying that being homeless is not quite as bad as dying of thirst?
Both are pretty dumb, but I want to know which it is.
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>being homeless is not quite as bad as dying of thirst?
Followed by:
>Both are pretty dumb
To quote myself:
>Oh wait, amimojo. This is status quo. Carry on.
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I still don't understand why this isn't prosecuted as an obvious cartel.
Probably because the people who could press charges own apartments?
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But they also likely have children, which pulls them in the exact opposite direction too.
This is the problem with one-dimensional analysis of multidimensional issue. You think you see something resembling a signal, and in reality, you see just one vector of it, if even that.
For an explanation (Score:3)
Re:For an explanation (Score:4, Interesting)
Up to the point where they can't rent enough units to sustain the business because nobody can afford to.
That's called "what the market will bear," and is, specifically, the goal.
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Up to the point where they can't rent enough units to sustain the business because nobody can afford to.
That's called "what the market will bear," and is, specifically, the goal.
Which is when landleeches start petitioning the government to provide rent assistance.
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Without real visibility and collusion, it usually took 3-5 years for this process to happen.
WIth RealPage, the process is shrunk to 1-2 days.
Re: For an explanation (Score:4, Interesting)
Isn't that what realtors do when advising customers what to ask for when selling a property? Why is one legal and the other isn't?
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Because... on a computer ...using an algorithm. That's like AI man... that shit is scary!
/s
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There are 5 fundamental differences / problems wtih RealPage and its one other competitor:
1. It's a duopoly. RealPage YieldStar has about 80% of the market; Yardi's RENTMaximizer has about 15-18% of the market, and then there's really no other competitor.
2. It's used by a super-majority of landords: Many major cities have 70-85% of the apartment landlords using RealPage's YieldStar, some cities where 100% of the landlords use RealPage, specifically certain burrows of NYC.
3. The RealPage contract (which I've
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This is so much worse than people realize-- it's an end run around price fixing allowing monopoly like exploitation. We don't allow them to work together like a cartel directly setting what everybody pays-- but simply having a 3rd party doing their conspiring for them. Just take any law or the crimes that motivated the law to be written involving organized crime and invent a new loophole to bring it back.
Software, internet, AI all will be applied to the old crimes and not always in obvious ways.
So they
"Customers can reject price recommendations" (Score:3)
I suppose that after making a price recommendation the software pops up with a prompt, "Receive more money from the labor of others with no effort on your part, Y/N?"
It's the fault of all those landlords for hitting Y!
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Actually, when they input a price is lower than the RealPage algorithm's price, they get flashed with a big error / warning popup that says, more less, "WARNING! Setting prices below the algorithm's recommendation is against your contract! Are you sure you wish to proceed?"
The apartment employees are instructed by their managers and owners to NEVER EVER go below the algorithm, except shady apartments that do this as a kind of marketing promotion when they need more rents. This si why the employees always te
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Funny trivia...
When I worked at RealPage for a few months in 2022, it was very ... regimented into microservices, and the three other devs onboarding with me were all given different sets of microservices to work on, that didn't seem to have any rhyme or reason.
We were never, ever told what the product actually was. I'd be assigned work one day on a forum, another day on a rental application software, another on fraud detection. We were told that the company did lots and lots of different things, but no one
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Very interesting, that's one way for a company to build products that almost every human worker making it would object to...
Not sure if this will work (Score:2)
Take the government to court (Score:2, Informative)
Here's a nice summary of how the Biden DOJ has been "colluding" with states such as California to forbid the use of price recommendation software: https://www.hklaw.com/en/insig... [hklaw.com]
I am no lawyer, but I do read legal blogs for fun, and I can hear a cacophony of objections to the legal theories that forbid landlords from getting recommendations -- recommendations that they don't even have to follow, recommendations that they seek out on their own without coordinating with anyone, and for which they pay a fee.
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Take the state to court.
That happens a lot in California. And despite the courts being stacked, the state often loses.
In the meantime, we have about the worse homelessness crisis in the world, and it continues to get even worse.
Re: Take the government to court (Score:2)
As I recall the majority (60%+) of RealPage users DON'T use the suggestions from the software to set rental prices.
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Bad reason - 1st am issues - will be struck down (Score:2)
Link to document follows.
In quick TL;DR summary this thing attempts to call use of "an algorithmic device" unlawful for certain content (rates for rental properties). It doesn't distinguish between legitimate data gathering and calls everyone "landlords" where really there are property owners, managers, single-unit ones, and multi-unit ones.
It pretends the constitutional issues are not important because "court takes a long time" (paraphrased).
It won't survive even cursory judicial review.
IMHO rental proper
How much do they make? (Score:2)
If a use ends up netting more than $1000 over what it would not using it, this is just a cost of doing business
You want to stop it? Jail time.
Vote those idiots out, people! (Score:4, Interesting)
Bring in supervisors who will start approving some goddamned apartment house building permits for once. Reduce rents the open market way, b y introducing more supply.
Another creative solution: approve permits for barge-mounted floating apartment buildings. Entrepreneurs can have those built in South Korean shipyards, like cruise ships, and parked in some quiet corner of San Francisco Bay that can be connected to land access.
Re: Vote those idiots out, people! (Score:2)
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We need real solutions, not the libertarian techbro alternative to housing.
Electric light was once the libertarian techno alternative to whale oil lamps.
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Electric light was once the libertarian techno alternative to whale oil lamps.
Do you know something about Joseph Swan that I don't in this regard?
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Bring in supervisors who will start approving some goddamned apartment house building permits for once. Reduce rents the open market way, b y introducing more supply.
LOL. Keeping fantasizing my friend. The people who could change this are the ones who are causing it. In other words, it will NOT change during your lifetime. Enjoy. :)
Bullshit fine (Score:2)
Cheap (Score:1)
$1,000 per infraction
Should be $1,000 times 2 ^ number-of-previous-infractions
Interesting (Score:2)
We (supposedly) can't even stop full sized physical human beings from crossing a border.
We (supposedly) can't even stop physical drugs from being smuggled.
How exactly are we going to stop people from ... using software?
Treating the symptoms... (Score:2)
Nothing in the above para
HA! (Score:1)
This board and their lawyers have no clue how this application works.
agreed. (Score:2)
this was just price fixing at arm's length.