The US Department of Justice filed a lawsuit Tuesday against six major apartment landlords, accusing them of coordinating a scheme through an algorithm at RealPage that kept millions of American renters in line by secretly setting their rent hikes.
The U.S. Department of Justice has filed a lawsuit against six major apartment landlords, alleging they conspired to artificially inflate rental prices through the use of RealPage’s rent-setting algorithm. The defendants are Greystar Real Estate Partners, Blackstone’s LivCor, Willow Bridge Property, Camden Property Trust, Pinnacle, and Cushman & Wakefield, which together oversee more than 1.3 million rental units nationwide.
According to the amended civil complaint by the DOJ, these landlords utilized RealPage’s software to share confidential rental data such as pricing and occupancy rates to coordinate rent increases that undercut market competition. Moreover, the complaint alleges that the landlords participated in “user groups” run by RealPage and engaged in “call arounds” to share private information.
The class action was filed during an era of rapid rent increases initiated by the COVID-19 pandemic, exacerbating housing affordability challenges across the United States. Almost half of American renters were cost burdened in 2022-that is, 30% or more of income went toward paying for rent and utilities.
As said, Antitrust Acting Assistant Attorney General Doha Mekki, ” Defendants in today’s lawsuit secretly traded information about each other’s pricing and used powerful algorithms to work together to boost the price of rent while families across America tried to make ends meet and save for a dream home.”
The nation’s largest apartment owner, Greystar, rejected the allegations by stating that the company would vigorously defend itself before the court, while other defendants either denied charges or refused comments.
RealPage, the software company under fire, is accused of facilitating these anticompetitive practices through its algorithmic pricing system. The company has denied the allegations, saying that its software provides pricing recommendations that landlords are not obligated to follow and can even suggest lowering rents.
This is one of the several antitrust enforcement crackdown measures the Biden administration has initiated and coordinated to suppress anticompetitive practices in all industrial endeavors. As President-elect Donald Trump is going to assume office on January 20, it is yet to be seen how the priorities of antitrust enforcement would change. The analysts opine, though that the case of RealPage will likely continue under the new administration because of bipartisan concern relating to housing affordability and market competition.
This case has very significant implications for the real estate industry regarding the use of algorithmic pricing tools and may well shape the future course of the regulatory approach toward technology-driven market coordination.
