Executives at property management software company RealPage claimed they had the “common good” in mind when they offered a price-fixing algorithm to commercial landlords, the U.S. Justice Department said in filing suit against the company on Friday. But the system allegedly drove up rents in communities across the country, contributing to the housing crisis.
The antitrust lawsuit, filed with attorneys general of states including California and Colorado, accuses RealPage of using confidential data about its customers to algorithmically determine the highest price renters would pay using its AI software.
U.S. Attorney General Merrick Garland and other officials said the company violated antitrust laws by providing the service, which provides commercial landlords with recommended rental rates and allows them to coordinate their prices with each other rather than having to compete.
Deputy Attorney General Jonathan Kanter said the lawsuit was “best understood in the words of RealPage executives themselves,” who said the company’s software allows landlords to “take advantage of every possible opportunity to raise prices, even under the most downward or unexpected conditions.”
“RealPage is telling landlords that it would prefer everyone to succeed rather than essentially trying to compete against each other,” Kanter said. “But that’s not how free markets work. Competition among landlords, not RealPage, should determine prices for tenants.”
Garland added: “Americans should not have to pay more rent just because a company found a new way to negotiate with landlords and break the law.”
As Shared dreams As reported in June, RealPage and the commercial landlords that rely on it have come under fire from regulators such as Accountable.US, which found that the six largest property management firms collectively added $300 million in profits in the first quarter of 2024, largely due to rent increases.
This windfall came at a time when rents have skyrocketed by more than 31% since 2019, while wages have only increased by 23%.
RealPage’s algorithm is said to have helped set rental prices for about 16 million rental units across the country, Accountable.US said.
“Today is a good day for renters and families and a bad day for predatory landlords,” said Lindsay Owens, executive director of the progressive think tank Groundwork Collaborative. “The Justice Department is right to take on the affordability crisis fueled by RealPage. Algorithms are being used to unfairly drive up the price of housing, meat and more. This price-fixing scheme must be stopped.”
Caroline Ciccone, president of Accountable.US, said Friday’s lawsuit shows that “the Department of Justice sees evidence of a major RealPage rent-fixing conspiracy that extends to metropolitan areas across the country.”
“We have documented how many of the same rental companies sued in the original rent-fixing lawsuit boasted of huge profits after jacking up rents,” Ciccone said. “Any real estate company using RealPage in any of these states should be seriously investigated. No renter in America should be ripped off in a potentially illegal rent-fixing scheme.”
Accountable.US added in a social media post: “As rents soared, RealPage executives boasted about how their software could ‘maximize’ profits, even in the face of a housing crisis.”
Andrea Beaty, research director at the Revolving Door Project, said RealPage’s actions have resulted in “renters across the country literally paying the price for corporate greed, even in the midst of a global pandemic.”
“This lawsuit will hopefully lead to renewed corporate responsibility in the rental market that goes beyond RealPage, which is far from the only company capitalizing on renters’ struggles for safe and affordable housing,” Beaty said. “We hope that in addition to the eight state attorneys general suing RealPage, more state attorneys general will join in responding to RealPage’s actions that are driving up rental costs in communities across their states.”
