The recent settlement between the Department of Justice and RealPage brings a mix of relief and skepticism for tenants. While it doesn’t eliminate RealPage’s role in the rental industry, it is expected to lessen the company’s ability to manipulate rental prices. The agreement prevents RealPage from collating nonpublic data from competing landlords, a critical change aimed at curbing rent hikes.
According to a report from The New York Times, RealPage maintains its innocence, with attorney Stephen Weissman asserting that the company has been unfairly portrayed. He stated, “There has been a great deal of misinformation about how RealPage’s software works and the value it provides for both housing providers and renters.”
Founded in 1998, RealPage has been a multifaceted tool for landlords, extending far beyond just rental pricing assistance. Despite its utility, investigations have revealed that its software has significantly impacted renters, often without their knowledge. For example, a 2020 investigation by The New York Times and The Markup found that RealPage’s flawed algorithms led to renters being denied housing due to incorrect background checks.
RealPage’s influence on rental prices was particularly noted, with the company claiming that landlords who used its services aggressively pursued every opportunity to raise rents even in challenging markets. Then, in August of the previous year, the Department of Justice, along with eight state attorneys general, filed an antitrust lawsuit against RealPage which stated that the company exploited sensitive data to boost prices.
The lawsuit specifically stated, “At bottom, RealPage is an algorithmic intermediary that collects, combines, and exploits landlords’ competitively sensitive information. And in so doing, it enriches itself and compliant landlords at the expense of renters who pay inflated prices and honest businesses that would otherwise compete.”
RealPage’s pricing systems, such as YieldStar and AI Revenue Management, required landlords to input sensitive rental data. This included private applications, rent levels, and lease histories—information generally kept confidential among competitors. The algorithms then processed this data collectively, generating pricing recommendations based on shared insights.
With an approximate 80% market share, as noted by the DOJ, critics have argued this monopoly allowed RealPage to charge landlords more, costs that were inevitably passed onto tenants. The rise in rents following the adoption of RealPage’s systems was notable; for instance, a 2022 ProPublica investigation revealed that in Nashville, rents skyrocketed by 14.5%, with landlords expressing satisfaction over revenue escalations facilitated by the software.
Instead of competing fairly for tenants, the lawsuit alleged that landlords leveraged RealPage’s software to collaborate indirectly, nudging rents higher. They didn’t need to physically meet to discuss prices; the software supposedly coordinated competitive pricing among them.
If a North Carolina judge approves the settlement, RealPage will be prohibited from using current lease information or blending different landlords’ confidential data to inform its pricing algorithms.
Gail Slater, leader of the DOJ’s antitrust division, emphasized the significance of independent pricing, stating, “Competing companies must make independent pricing decisions. With the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement.”
What does this mean for the future of rental pricing? Will this settlement effectively protect tenants or merely scratch the surface? These questions remain central to discussions about fair housing practices.
Is RealPage’s software legal? While the settlement suggests a path towards more regulation, RealPage insists that its systems operate legally. They argue that misinformation has clouded public perception.
How will the settlement impact rental prices? It is expected to create a more competitive landscape for rental pricing, potentially leading to fairer prices for tenants as the data-sharing practices end. However, only time will reveal the full impact.
What role does the DOJ play in regulating rental software? The DOJ enforces antitrust laws and seeks to correct anti-competitive practices, aiming to protect consumers and ensure a fair marketplace.
The road ahead for tenants and landlords alike is still uncertain. As we observe these developments, it’s crucial to stay informed and engaged in discussions surrounding rental practices.
If you’re interested in more insights into housing policies and market trends, keep exploring related content at Moyens I/O.