DENVER — The U.S. Department of Justice has initiated legal action against several prominent property management firms, alleging that they have conspired to keep rental prices elevated. This coordination reportedly involves the use of algorithms to assist in determining rent prices, as well as the clandestine sharing of critical information regarding rents with rival companies to enhance their financial performance.
This lawsuit emerges at a time when renters across America face significant challenges within a relentless housing market, where wages have failed to keep pace with rising rent costs. Recent statistics reveal that, in 2022, over half of American renters allocated more than 30% of their income to cover rent and utility expenses, marking a record high.
Such financial strain leads to dire daily choices between essential needs like medication, groceries, and school supplies, alongside the looming threat of eviction. Each year, approximately 1.5 million children experience eviction, reflecting the critical nature of this issue as highlighted by Princeton University’s Eviction Lab.
Although multiple factors contribute to the current housing crisis—such as a decline in new housing developments over the past decade—the Justice Department posits that the actions of large landlords are exacerbating the situation. Joined by ten states, including North Carolina, Tennessee, Colorado, and California, the Justice Department has accused six major landlords, who collectively manage over 1.3 million housing units across 43 states and the District of Columbia, of colluding to prevent rent reductions.
One of the accused landlords, Greystar Real Estate Partners LLC, did not respond to a request for comment but shared an impersonal statement on their website. The statement emphasized Greystar’s commitment to conducting business ethically, asserting that they have not participated in any anti-competitive behaviors and vowing to defend themselves vigorously against the allegations.
The lawsuit claims that these landlords have been sharing private information on rents and occupancy rates through emails, phone conversations, or group communications. The information in question allegedly includes data on lease renewal rates, the frequency of accepting algorithmic price suggestions, incentives offered (like a month of free rent), and their pricing strategies for future quarters.
According to the Justice Department, one of the involved landlords has agreed to work with authorities, with a proposed settlement that would limit the company’s ability to utilize competitors’ data and algorithms for rent setting.
“Today’s action against RealPage and six major landlords aims to prioritize the welfare of individuals over corporate profits and to enhance housing affordability for millions,” stated Doha Mekki, the acting assistant attorney general for the antitrust division in a press release issued on Tuesday.
These landlords have been implicated in an ongoing lawsuit against RealPage, a company that operates an algorithm designed to recommend rental prices. Prosecutors argue that this algorithm relies on sensitive competitive data, thereby enabling landlords to synchronize their pricing and diminish competition that could otherwise lead to lower rents.
In a response, Jennifer Bowcock, RealPage’s senior vice president for communications, contended that their software is applied to fewer than 10% of rental units in the United States, and that their price recommendations are implemented less than half of the time. She emphasized the need to stop assigning blame to RealPage and its clients for the challenges of housing affordability, asserting that the fundamental issue lies in the insufficient supply of available housing.
