dhork , 4 hours ago

The software vendor does have a point: the software doesn’t set prices itself, it just makes suggestions based on the metrics it sees, and ultimately the property owners are the ones that raise rents. But I don’t think the developer realizes the role it is playing in the feedback loop.

Landlords pay for this software to help them set “fair” rents. But if the software consistently sets rents that the landlord sees as too low, they will question whether the software is worth paying for, and the software vendor goes bust. On the other hand, if the software sets rents that are too high, landlords will see that software as working well, and will continue to use it. So the developer is incentivised to goose the numbers up a bit, knowing that landlords are free to set their rents lower…

… except we all know that’s not what actually happens, particularly for these large real-estate conglomerates whose tenants are just lines in a spreadsheet. Some pencil pusher is just using these numbers from the software as-is, because there is probably more paperwork involved in justifying a rent change to their boss, while if they just accept the computers’ numbers they can make it to Happy Hour a bit early.

It gets even worse when most of the real estate in an area is owned this way, because then the additional “the computer told me to charge this” surcharge gets “baked into” the overall market, and gives landlords who don’t use the software a reason to raise rates, because of “the market”. Then next year, it all rises again, because the software sees the overall increase in rates and thinks it’s because of “the market” and not because of its role in the increase last year.

The incentives in this system benefit everyone but the renter. This may be a appropriate place for the government to step in and force change. Government is accountable to voters, and there are more voters who are renters than landlords.