RealPage, a real estate software firm, has initiated a federal lawsuit against the city of Berkeley, California, marking the latest attempt by municipalities to prevent landlords from employing algorithms when determining rental prices. Many cities argue that such practices stifle competition and contribute to rising housing costs.
Hailing from Texas, RealPage contends that Berkeley’s new ordinance, set to commence this month, infringes on their right to free speech and stems from “misinformation and frequently repeated false claims” about its services. “The ordinance Berkeley is seeking to implement curtails speech – specifically, advice and recommendations from RealPage to its clients,” remarked Stephen Weissman, a lawyer for RealPage, during a press briefing.
Previously, the U.S. Department of Justice (DOJ) filed a lawsuit against RealPage, accusing the company, under the Biden administration, of leveraging algorithms to pool confidential data from various real estate management firms. This method reportedly allows landlords to synchronize prices and skirt competition that would naturally drive rents lower, an action likened by prosecutors to illegal cartel-like price coordination. Among RealPage’s clients are major landlords overseeing millions of rental units nationwide.
The DOJ lawsuit highlighted statements from RealPage executives, who discussed how their tools optimize pricing for landlords. One executive was noted saying, “It’s better for everyone to succeed together rather than competing against one another, which can ultimately suppress the industry.”
Following suit, cities such as San Francisco, Philadelphia, and Minneapolis have enacted laws limiting the use of rental algorithms. The DOJ case is still active, alongside lawsuits from tenants and attorneys general from Arizona and Washington, D.C. Berkeley’s measure, which penalizes offenders with fines up to $1,000 per breach, alleges that algorithm-driven software has led to “double-digit rent surges, increased vacancy, and higher eviction rates.”
RealPage refutes these allegations, insisting the true cause of high rent is insufficient housing supply. The firm denies offering “price-fixing software” or a “coordinated pricing algorithm,” asserting that its suggestions, whether they result in higher, lowered, or unchanged pricing, are aligned with the specific goals of property owners utilizing their platform.
The company argues that since landlords aim to maximize income, its software aids them in maintaining occupancy levels, which can alleviate housing supply pressures. The lawsuit also targets the American Economic Liberties Project, an advocacy group opposing monopolistic tendencies, accusing it of disseminating inaccuracies prompting local authorities to adopt flawed policies. “AELP’s misleading narrative has influenced certain cities quick to blame a scapegoat for their role in limiting housing supply,” the lawsuit claims.
Weissman noted that Berkeley had approved the ordinance without allowing RealPage to present its defense and mentioned the potential for further legal actions against other cities, including San Francisco, that have implemented similar regulations.
A representative from Berkeley’s city staff refrained from commenting on the legal action, noting that the city has not yet received formal notice of the complaint. The American Economic Liberties Project has also yet to respond to inquiries regarding the lawsuit.