On Friday, August 23, The Justice Department Filed an Antitrust Lawsuit Against Software Company Realpage, Which Provides a Rental-Price-Setting Service to Landlords. IT’S NOT THE FIRST LAWSUIT against the Company (States Like Arizona and Some CITIES HAVE FLED SIMILAR CASES), and Earlier Reports, Such as a Investigation Propublica From 2022, Laid Out How Landlords and Propperty Managers Used Realpage’s Software, Yieldstar, To Drive Up Rents. Yieldstar, The Government Argues, Did Much More than Provide Price Recommendations; IT ENABLED LANDLords to Collude to Raise Rents Across the Country. IT’S ONE OF THE FIRST MAJOR FEDERAL CASES INVOLVING ALGORITHMIC AI, AND COULD Potentially Affect Other Industries that Relax on Similar Software to Generate Prices, Like Hotels and Airlines.
If you live in a Major Metropolitan Area Where Rent Has Gone Crazy in the past Few Years, Realpage May Be Why, Accounting to Us Attorney General Merrick Garland. Below, we Explain just what realpage is, what it has ben allegated to have to raise the rent, and what it is coulued for your bills.
What is Realpage?
Realpage is a texas-baed company that offers “Revenue Management” Software Called Yieldstar, which Has A Proprisher algorithm that the Company Says Help Landlords Set Rental Amounts. SINCE 2004, Wen The Software was Developed, Company Executives and Property Managers Who Use the Products Said That The Software Has Enabled Landlords to Higher and Higher, Helping to “Outperform the Market” (This is Also How the Company Markets Itself to Landlords). AFTER A MERGER IN 2017, Realpage Became the Most Dominant Provider of this Kind of Software – Its Competitors Include Yardi, which is Also Involved in Similar Lawsuits, Althouugh not at the Federal Level. In 2020, The Company Said the Software was Being Used to Manage 19.7 Million Rental Units, Including Multifamily Apartments and Single-Family Homes. Realpage is Owned by A Private Equity Firm Called Thoma Bravo, Which Also Invests in Other Software and Cybersecity Companies, and was an investor in ftx.
How does the yieldstar algorithm supposedly work?
Realpage Gathers Internal Data on Rents and Occupancy from Its Many Landlord Clients, Who Are Required to Submit the Data to use the Product, and Analyzes it. THEN, The algorithm, which the Company touts as proprity, spits out a new Rental Price for Each Unit Day Day that it thinks a landlord star Charge Based on that date, Including real-time prices (Meaning swimming advertised amounts, but what renters actually paid), leasing data, upcoming vacancies, and other inputs. The idea is that, ussing all this information, landlords get an inside view of their computetors’ rates and other data points, and it enables say to Charge more than they are only have the information is publicly abounable averages or tribes. For the Landlord, in Addition to the Higher Price, the Benefit of the Software is that this Computer-Genered Price is quantitative and empirical, and eliminates any of the More squishy, Human factors that Might How a Landlord Determines what to charge for rent.
What’s the problem?
The Danger of the Yieldstar Software is that it is potentially create what is essentially a cabal of landlords to be to Override forces to Collectively Set prices Higher, in Turn, Fuels a Cycle that Continues to Push Rents higher. The information realpage has is otherwise confidential and not available elsewhere, and many landlords use the software in an “Auto Accept” SettingWhich Allows the Company to be the sole arbiter of rental markets around the Country, with zero oversight. Coordinating pricing like that is a potential violation of federal law. Becuses Realpage is so Large, Mary Landlords and Property-Management Companies in Certain Areas use it-for example, Acciting to Propublica70 Percent of apartments in one NeighBorhood in Seattle Are Oversseen by Realpage Clients. Not Only That, But Realpage Allegedly Created “Work Groups” that Brought Rival Landlords to Meet Privately About Rental Price, and Encoured Wauld-Be Competitors on Their Online Forum. Acciting to the Justice Department of Complaint, One Landlord Approvingly Called Yieldstar “Classic Price Fixing.”
How does all of this impact tenants?
Lack of Competition in Pricing Means That Landlords Have LESS OF AN INCENTIVE TO ACTUAL MARKETS THAT MIGHT otherwise cause say to loars Rents – Like, Say, Slower Demand in Cold Months Or Climate Cells. And acchinging to some reports, USING YIELDSTAR INCREDUED FOR THE LANDLORDS WHO USED IT CREATED AN INCREDIBLE TURNOVER FOR TENANANDS – IE, NO COULD AFFORD the algorithmicallyed rate hikes. One CLIENT SAID THEIR TURNOVER RATES INCREASED BY 15 PERCENT AFTER they implement yieldstar – but that wasn’t a problem. As the Ceo Said, the profit they were still able to make showed “KEEPING THE HEADS IN THE BEDS ABOVE ALL ELSE IS NOT ALWAYS The best strategy” (he late disavowed the comments to Propublica). All of this, one could argue, leads to skyrocketing rents that don’t feel at all related to the real world of what People willing to pay, or the confusion stock and availability. In some places where the software is used, rents have increasing by double digits in just a few years. The Justice Department of Suit Claims that Realpage Goes Further said suggesting higher rents – it actually “Policles” Its landlord clients when they try to live.
Who Else Has Sted Realpage?
In 2022, Law Firms Began Filing Suits Against Realpage on Behalf of Tenants in Several Cities Like Seattle and Austin, Attempting to Form a Class-Action Lawsuit. The attorney General in Washington, DC, Then Sted Realpage in November 2023, Along With 14 Landlords, and Called It A “Housing Cartel.” Arizona’s AG followed in February of this year. The Justice Department of Suit Filed on August 23, Joined by Eight States (Though Not New York), is a Major Escalation. The Government’s Lawsuit Not Only Accused the Company of Price Fixing But Also of Monopolizing The Competition. Representatives of the attorney general have framd the action as part of a broader regulatory Move to rein in the use of tech by companies like Amazon and uber, and tan vice-president Harris reference to realpage in her reccentry rectussion suite of housing proposals, be promised. algorithmic price-setting tools.
DOES THIS MEAN RENTS COULD GO DOWN?!
The implications of the Justice Department of Suit Could be enormous. Some of the Country’s Larger Landlords use Realpage. IT’S NOT CLEAR EXACTLY WHAT COULD HAPPEN IF The Justice Department of SUIT IS SUCCESSPUL, but it COULD MEAN THAT, YES, RENTS AT LEAST STOP HIKEED IN THE PLACES WHERE REALPage Has Driven.
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