Justice Dept. Sues Major Landlords That Use Software for Setting Rents
WASHINGTON — The Justice Department added six of the nation’s biggest landlords to a lawsuit Tuesday that accuses them of price-fixing to set rent rates.
All of them use a computer program called RealPage that sets rents based on algorithms and data on market conditions.
The Justice Department says the landlords went beyond common use of RealPage to share information that helped them collude in keeping rents high.
About half of Americans are spending more than 30% of their household income on rent and utilities, an all-time high, according to the U.S. Census Bureau. The Justice Department says price-fixing by landlords named in its lawsuit is a big part of the reason.
Although a decrease in new home construction over the past decade is a factor in the housing shortage that keeps rents high, major landlords are contributing, according to the Justice Department.
About 1.5 million households that include children get evicted each year, according to Princeton University’s Eviction Lab.
The landlords named in the amended lawsuit are Camden, Greystar, Cushman & Wakefield, LivCor, Cortland, and Willow Bridge. They operate in 43 states and the District of Columbia.
Ten states joined in the lawsuit. The largest are California, Colorado and Minnesota.
Rather than rely only on the software, the landlords also shared private information on rental pricing of their apartments, the number of their residents and ways to change price plans to raise rent but in a way that represents a potential antitrust violation, according to the Justice Department.
The amended complaint accuses the landlords of a “scheme” that resulted in “harming millions of American renters.”
“Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country,” said Doha Mekki, the Justice Department’s acting assistant attorney general for antitrust, in a press release.
RealPage denied that its software was unfairly slanting rents in favor of landlords.
RealPage said, “Fewer than 10% of all rental housing units in the U.S. use RealPage software to suggest rental prices, and our software recommendations are accepted less than half the time.”
In addition to a housing shortage, inflation and inefficient permitting requirements are driving up rents, RealPage says on its website.
The RealPage statement conflicts with a White House report last month that said as many as one in four rentals nationwide use a RealPage pricing algorithm. In some markets, the use rate is higher, the report said.
“We find that anticompetitive pricing costs renters in algorithm-utilizing buildings an average of $70 a month,” the report said. “In total, we estimate the costs to renters in 2023 was $3.8 billion. This estimate is likely a lower bound on the true costs.”
In six major cities, renters pay at least $100 more per month for housing because of algorithmic software like RealPage, the report said.
The Justice Department started suing major landlords three years ago in ongoing litigation. The amended complaint filed Tuesday in North Carolina federal court adds evidence for prosecutors.
Landlords named in the lawsuit say market conditions should be blamed for high rents, not their business practices.
A Greystar statement said it manages its rental units with the “utmost integrity.”
“At no time did Greystar engage in any anticompetitive practices,” the statement says.
The case is U.S. et al. v. RealPage Inc. in U.S. District Court for the Middle District of North Carolina.
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