Dozens of class actions filed since 2022 against the Texas based company RealPage, now consolidated into a single class action in Nashville, Tennessee, demonstrate the single most significant factor behind the last few years monumental rent increases and lack of affordable housing across the continent: widespread and unchecked anti-competitive rent price-fixing directed by shady algorithms.
Since the Propublica investigation in 2022 that put a spotlight on the issue, the situation has only worsened. Rent-fixing by algorithm has enabled and continues to enable landlords and real estate companies to do covertly and indirectly what they can’t do directly. As we speak, rents are being pushed into stratospheric heights, forcing many low earners into encampments.
RealPage’s software uses an algorithm to churn through a mountain of data during the night to suggest daily prices for available rental units. The software uses not only information about the apartment being priced and the property where it is located, but also private data on what nearby competitors are charging in rents. The software considers actual rents paid to those rivals—not just what they are advertising, the company told ProPublica.
Two district attorneys (Washington, Arizona) are suing Realpage and more than a dozen of the the largest apartment building landlords, accusing them of a scheme to artificially fix rental prices in violation of U.S. antitrust law, all while concealing their conspiracy from the public. RealPage has denied any wrongdoing in the earlier cases, and it said it would contest both cases.
Washington
Washington alleges that 14 landlords conspired to keep rental prices high using RealPage’s revenue management platform and seeks triple damages and other relief to restore competitive conditions. Landlords conspired to share information, limit supply, and drive up rents via RealPage’s software which forced tenants to pay millions of dollars above fair market prices.
“In a truly competitive market, one would expect competitors to keep their pricing strategies confidential — especially if they believe those strategies provide a competitive edge,” the lawsuit says.
In response, RealPage declared that there is no causal connection between revenue management software and increases in market-wide rents. The problem with denying causal connection, however, is a flagrant lack of algorithmic transparency and intentional concealment from the public. You can’t both have a secret algorithm and deny causation between the algorithm conduct and the obvious widespread result being artificial rent increase and illegal price-fixing. So that defense will fail.
Arizona
Arizona alleges that by providing highly detailed, sensitive, non-public leasing data with RealPage, the defendant landlords departed from normal competitive behavior and engaged in a price-fixing conspiracy. RealPage then used its revenue management algorithm to illegally set prices for all participants.
Moreover, RealPage’s conspiracy with the landlord co-defendants violate both the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud Act.
Arizona’s antitrust law prohibits conspiracies in restraint of trade and attempts to establish monopolies to control or fix prices. The State’s consumer fraud statute makes it unlawful for companies to engage in deceptive or unfair acts or practices or to conceal or suppress material facts in connection with a sale, in this case apartment leases.
The illegal practices of the defendants led to artificially inflated rental prices and caused Phoenix and Tucson-area residents to pay millions of dollars more in rent.
Defendants conspired to enrich themselves during a period when inflation was at historic highs and Arizona renters struggled to keep up with massive rent increases.
The Class Actions
The private lawsuits by renter-plaintiffs accuse RealPage to collude with landlords to artificially inflate rents and limit the supply of housing, alleging that owners, operators and managers of large residential multifamily complexes used RealPage software to keep rental prices in many major U.S. cities above market rates and shared non-public, commercially sensitive information with RealPage as part of the conspiracy.
Two landlords have settled so far.