I was impressed by most of this article in Curbed, which did some actual reporting on the discrepancy between landlords saying rents in New York City were surging “because people came flooding back” and the fact that, according to all data, people did not actually come flooding back. The reporting goes to impressive shoe-leather lengths — the author even contacts the New York City Water Board for clarification on how much waste they processed in 2021! Then comes the end, which identifies the culprit as The Algorithm — specifically, that of RealPage, a Texas-based “property management software” company that sells software-as-a-service to computerize the process of landlords doing landlord shit — and leaves it there. This section of the article contains a lot of “it’s hard to know who all their customers are” and “if this happened, it could do this” speculation, but few specifics. Naturally, I wanted to know more.
(source: RealPage’s training video for AI Revenue Management, 2022; it just gets more infuriating from here, folks)
Reporters doing reporting
The Curbed piece links to a lengthier ProPublica investigation from last October about RealPage. The piece mentions various class-action lawsuits that have been filed against the company — although the state of them seems to be a bit of a mess because of the sheer number of people suing in different states — and a Department of Justice investigation.
ProPublica’s article is, for the most part, quite good, and less credulous than I was worried about from the “secret algorithm” headline. The reporting is specific about the potential antitrust and collusion problems that caused the company to be sued. And the reporting punctures the company’s hype, if not totally, then a bit. RealPage’s “AI Revenue Management,” the article states, is largely a rebrand of the company’s existing software — or, more specifically, software it bought from other companies — to wrap it all up in a shiny new buzzword. RealPage acquired two components of its “AI Revenue Management” suite in 2017: Lease Rent Options, one of their competitors, and Axiometrics, a data trove. But the product getting the headlines, YieldStar, dates back to 2005, when it was touted in a trade rag1 by one Jeffrey Roper. In the 1980s, Roper helped design fare-setting software for Alaska Airlines, which soon joined a number of other airlines in being sued by the Department of Justice for alleged price fixing. Roper’s takeaway was that he could do the same thing for other markets, like housing, a process he described charmingly back then:
‘You get pricing that is infinitely more responsive to changes in market conditions because the computer is capable of looking at more dimensions than a human is,’ says Jeffrey Roper, who developed such a program during a previous stint at Alaska Airlines. There are other benefits as well, adds Roper, now president of M/PF YieldStar, which markets a multifamily-specific revenue management system. An automated pricing system ‘doesn’t take holidays, and it never has an attitude,’ he says, smiling.
This raises an obvious question: If this software has been around since 2005, how much has it changed since then? Glassdoor reviews are what they are, but a consistent theme among software developers — often acknowledged as true by the guy RealPage got to reply to their Glassdoor reviews — is that the various software products they’ve bought from others over the years are poorly integrated and maintained, and in some cases barely updated from their Bush-era versions.2
And if the software has been around since 2005, how much of the recent rent spike nationwide can be attributed to it? After all, ProPublica identifies several other reasons rent is soaring, such as private equity firms buying up housing across the country. There are other factors, like the rise of companies like Airbnb effectively converting homes to unregulated short-term hotels, and the patchwork nature of and varying appetite for rent regulations nationwide. All of these almost certainly have ripple effects just by existing: they make rent go up, other landlords follow. ProPublica’s reporting suggests that the company’s influence is concentrated patchwork among neighborhoods and cities. In some places it’s huge — “in one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage,” the article states. Other cities like Philadelphia and Chicago3, the article suggests, have fewer properties owned by those huge corporations known to use RealStar, and thus may be less vulnerable to this specific company. Maybe!
Regardless of its actual influence — which, I should be clear, seems substantial in market-share terms, and bad! — RealPage has an obvious interest in taking all the credit for rising rent prices. It helps their business. When RealPage exec Andrew Bowen goes on stage at a tech conference and says something like “I think it’s driving [the rent increases]. As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually,” he is flattering both the company and its landlord clients: see, our software is an amazing breakthrough that you should give us money for, because we know you’d never ever ever want to jack up people’s rent otherwise, right?
(Check out the Corporate Memphis here! I’m reminded of CARI’s description of it : “scenes depicting idyllic millennial living spaces and collaborative activities, cynically friendly corporate posturing.”)
The Oracle of it all
For that matter, how does RealPage’s software actually work? The ProPublica article is not specific, because getting the answer is hard by design. RealPage makes enterprise SaaS software. You can’t just go buy an app and check it out — you have to contact their sales team, and then presumably prove that you are an actual landlord and not someone doing Internet journalism. Luckily, the ProPublica piece does include a copy of one of the California class-action complaints. A lot of what’s in the complaint simply repeats the existing reporting. But there are nuggets like this:
Specifically, every morning, RealPage provides participating Lessors with recommended price levels. Lessors typically must communicate to a RealPage “Pricing Advisor” that they have “accept[ed]” or “confirm[ed] the “approved pricing” within a specified time frame. If Lessors wish to diverge from the “approved pricing” they must submit reasoning for doing so and await approval. RealPage encourages participating Lessors to have daily calls between the Lessors’ employees with pricing responsibility and the RealPage Pricing Advisor.
If there is a disagreement between the participating Lessor and the
RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management
for resolution, and specific reasons justifying a departure from RealPage’s pricing
level are usually required. But RealPage emphasizes the need for discipline among
participating Lessors and urges them that for its coordinated algorithmic pricing to
be the most successful in increasing rents, participating Lessors must adopt
RealPage’s pricing at least 80% of the time.
This is a very interesting paragraph! One, it describes an actual, concrete, and bad decision: the software is designed to create friction, delay, and human veto power to make it as difficult as possible to set the rent differently. It also complicates ProPublica’s takeaway that “removing the human element” is what makes rents soar — if anything this seems to add human involvement, and the software has a thicket of permissions for various middle managers and user roles familiar to anyone who’s used Oracle anything. Humans telling other humans to be less human, which if you’ve paid money for this software shouldn’t be too hard a task.
More importantly, that paragraph provides us with some jargon that we can use to research. Searching “RealPage” “Pricing Advisor” brings up a few more copies of the lawsuit, and various cheery soulless bios and ghoulish Day in the Life videos (the man in this video is the “smug face” I mentioned earlier).
Then, there’s this training slide deck about a ~2021 version of the software hosted by the Southern management company The Medve Group. (I’m honestly surprised this is still up given the attention given to RealPage after the ProPublica article and Justice Dept. investigation, so I’ve downloaded the PDF just in case.)
If you can get past the corporate sluice (“We believe in doing what’s right. Always.”), you do get a lot of screenshots of the interface, and explanations of the “Pricing Advisors”‘ role in telling people how to use it. But, because the slide deck is aimed at end users and not developers, details are scant. And because it’s aimed at industry insiders — and is a set of slides without the accompanying talk or book — there’s a lot of jargon. What is “staleness” exactly? “Lease compliance”?
For the answer to this, we can turn to one of the worst places in the world: the /r/PropertyManagement subreddit. After doing a couple ablutions to cleanse your immortal soul of the stain of voluntarily browsing the landlord subreddit, you’ll find that Redditor landlords are pretty generous with, if not rent, then information. One person posted a link to tutorials compiled by one “Debbie-Ann,” set to off-brand Peter Gabriel music. Another person posted, in public, the jackpot: a link to RealPage’s online training portal, where you can register for free to gain access to various soulless Captivate trainings.4 You do not need to go through sales for this. You do not need to be a landlord. You can register with a throwaway Gmail, as I did, and get access to them all (until they take it down, at least).
the banality of algorithms
The important thing about these trainings are that they are boring. They are so, so boring. I’ve spent a few hours on a fine Sunday afternoon going through them, which is probably more time than most of RealPage’s actual landlord clients can stomach. Because these trainings are also targeted at end users, they too do not contain much information about the data and formulae behind their “AI revenue management,” besides the general idea of optimizing everything, including whether you lease a unit at all, to make the numbers get as big as possible. They are not sexy, and for the most part they don’t make good Content. I mean, there are the knockoff Metaverse avatars standing in front of a screenshot of RealPage’s “pricing matrix” — one of the software components that dates back to 2005 in concept and design, if likely not in its data. (Check out the half-assed putting most people in black pants to save having to actually draw things 3D; corporate Memphis looks so good in comparison to this shit, I swear:)
Each of these lovingly rendered illustrations represents a potential client5. All of them are, for lack of a better term, bougie, even when they are supposedly broke, like fourth from the left: “Katie just graduated from college and is getting her first apartment. Money is tight, so she wants to stay under $1,000, but she wants something nice and would love a pool view.” (I honestly can’t tell whether this is meant as contempt or just out of touch.)
Other trainings walk you through how to talk to people when they point out things like the fact that this software offers a $1,000 spread of rent differences for the same apartment, or the fact that people who don’t use this software are offering some sweet COVID deals they definitely won’t rescind in a year:
(Yes, even corporate training does the three-choice narrative structure.)
In fact, RealPage’s training materials cover the exact scenario mentioned in the ProPublica article, where a Boston tenant found a similar unit to hers in the same building advertised for less and asked if she could just rent that instead. The tenant got her wish, which they really wish she wouldn’t:
But most of these videos are the banal stuff of most corporate software instruction videos, where they walk you through how to use an interface. They do not make for good screenshots, and their workings are too mind-meltingly boring to draw pageviews. But they contain the real evil. For instance, in another training, “Manage Lease Renewals for Property Managers,” you can walk through how to jack up a long-time resident’s rent from $1,188 to $1,5976, roughly a 34% increase. There are no Metaverse avatars here. There are no cute skits about Katie the college graduate. There is just an interface, and a list of instructions to follow:
If you have the stomach for it, I recommend actually doing this training, just so you can get the full experience. If you don’t, which I understand, here’s what they tell you:
Go through each offer to determine whether they align with strategy, or if an adjustment would be more beneficial. This resident has been here since the property opened, and due to recent upgrades and renovations across the property, the rent is well below market rent. Override the unit’s renewal offer.
How did that make you feel? Disgusted? Sick? I certainly felt sick for an hour or so after doing it, and I wasn’t even actually doing anything real.
The thing is, “the algorithm” should have very little to do with that sick feeling. The coldness of the interface and robotic voice certainly make for a stark contrast with the thing you are doing, but they aren’t the cause. The moment you start thinking about someone’s longtime home as something that can “align with strategy,” and about pricing someone out of their longtime home as “an adjustment that would be more beneficial,” you have morally lost. It doesn’t really matter how you go about making that adjustment. As former FTC chairwoman Maureen K. Ohlhausen put it, as quoted in ProPublica:
‘Is it OK for a guy named Bob to collect confidential price strategy information from all the participants in a market and then tell everybody how they should price?’ [Ohlhausen] said. ‘If it isn’t OK for a guy named Bob to do it, then it probably isn’t OK for an algorithm to do it either.’
Would it be OK for a guy named Bob to jack up your rent by 33% for no reason besides that he can make his numbers go up more? Bob probably wanted to do it anyway. It’s hard to write about this kind of research, because any indication that multiple people suck in a situation will instantly be seized upon by everyone else as proof that they must then be blameless. Roper, for instance, posted a very tsk-tsk response to the ProPublica piece, basically amounting to “yeah, I said what I said, but we’re not MAKING the landlords jack up your rent!” Sure. And yet, his software certainly isn’t helping. And yet, I’m sure that RealPage’s competitors’ software is just as bad, for the exact same underlying reasons.7 As the saying goes, Everybody Sucks Here. It’s always worthwhile to know the specifics of how, exactly, everybody sucks.
YieldStar itself has several sponsored pieces in this publication.
Also, in 2016, one anonymous dev wrote this, which the guy responding to all the reviews obviously denied but reads a bit differently now that there’s a DOJ investigation: “There is also quite a bit of fishy business in the company’s history and books. Look closely. Also, look around you. 1 out of 3 of you might be committing fraud.”
Bringing it back to the Curbed piece: Curbed is a New York Magazine vertical, and this article is primarily about New York City. NYC has — at least relative to the rest of the USA — relatively strict regulations on rent increases and a (relatively…) high level of rent-stabilized buildings, which almost certainly makes it less attractive to this sort of company.
Apparently the auto-preview for this calls it “an outdated portal,” but the guy on Reddit — who, I should reiterate, posted this in public for anyone to see — posted it a few months ago, and the most recent trainings are from mid-2022.
The kids in the middle, according to this video, are twins. This is definitely not because their illustrations have the exact same face.
the exact figure comes later in the video than the screenshot
One of RealPage’s competitors, Yardi, is probably very happy to not have been mentioned in the ProPublica article, but they basically exist for the same purpose: to help landlords jack up your rent. Apropos of nothing, they have also sued RealPage previously alleging that the company hacked them.