DOJ sues real estate company, alleging it colluded to drive up rent prices

The Department of Justice sued RealPage on Friday, accusing the company of violating antitrust laws by carrying out a price-fixing scheme that involved sharing private rent information among landlord competitors.

The DOJ said RealPage, a Texas-based software company widely used in the real estate industry, replaced “competition with coordination” in urban areas, leading to widespread artificial inflation of rent prices.

RealPage “substitutes unity for rivalry. It subverts competition and the competitive process. It does so openly and directly — and American renters are left paying the price,” DOJ attorneys wrote in the lawsuit.

Attorney General Merrick Garland said in a press conference announcing the lawsuit that the lawsuit was the result of a two-year investigation. Eight states, including California, Colorado, Connecticut, North Carolina, Minnesota, Oregon, and Tennessee, joined the DOJ in the suit.

RealPage's website boasts that it provides pricing services internationally for more than 24 million rental units.

"This software is developed, marketed, and sold to enable landlords to sidestep vigorous competition in the rental market," Garland said, alleging that RealPage violated the Sherman Antitrust Act, legislation designed to combat business monopolies.

Exorbitant rent prices are a top source of anxiety for young voters, and rent rates have an outsize impact on their demographic — one statistic found that 84% of Generation Z members who live on their own rent instead of buy.

RealPage provides its pricing services to a vast majority of companies that manage apartments, DOJ attorneys noted. RealPage describes its services, which are provided mainly through a program called YieldStar but also through other programs, as "revenue management."

In practice, companies that manage large apartment buildings in urban areas will set their rent rates using a RealPage product like YieldStar by sending information to YieldStar, which in turn will generate an algorithm of pricing information for the apartment management companies. The companies, which operate as landlords, then use that information to give prospective renters their rent rates or give renewal rent rates to current renters who are considering renewing their leases.

Companies managing different apartment buildings are all, therefore, sharing "competitively sensitive" pricing data with one dominating company, RealPage, the DOJ alleged, saying RealPage, in turn, "allows landlords to manipulate, distort, and subvert market forces."

The lawsuit quoted landlords who had experiences with RealPage. One landlord said it "can eliminate the guess game" with pricing decisions.

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“I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price-fixing,” another landlord said.

RealPage's press office did not respond to a request for comment.