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Rental prices are high across the country, but demand and inflation may not be the only reason for that. Pricing algorithms may be to blame, according to lawsuits filed across the country, including one recently filed in Arizona.
Arizona Attorney General Chris Mays filed a lawsuit Wednesday against RealPage, a $9 billion software company that provides pricing recommendations to landlords of 4.5 million homes across the country.
Mays claims that the landlords worked with RealPage and nine other property management companies named as co-defendants to stifle competition and essentially create a “rental monopoly” in Arizona’s largest city. As a result, it was claimed that households’ rents would increase by 30% to 76% within six years. process.
For context, Statista estimates that the average monthly rent for a two-bedroom apartment across the United States in January 2017 was $1,013. By November 2023, that average had increased to his $1,317, an increase of about 30%. A 76% national rent increase would bring the average rent to $1,782.88.
According to the Arizona Attorney’s Office, RealPage “used revenue management algorithms to illegally set prices” for a network of landlords that used its services.
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Arizona Attorney General Chris Mays.Photo courtesy of Mario Tama/Getty Images
“They weren’t competing at all,” Mays said. “They were colluding with each other. Using this sensitive data, RealPage told competitors which units to rent, when to rent them, and at what price. This was not a fair market, it was a fixed market. .”
Related: What landlords need to know about automatic rent payments
Mayes is not the first person to raise concerns or take legal action against RealPage.
Earlier this month, D.C. Attorney General Brian Schwalb also filed a lawsuit against RealPage for over 50,000 apartments in D.C., alleging that RealPage’s software had been used to overcharge rents for years. woke up.
“Landlords are forced, under the terms of their contracts with RealPage, to charge fees as directed by RealPage,” Schwalb told CNBC at the time.
Despite RealPage telling the outlet that customers don’t have to take advantage of rent increases recommended by the algorithm, a 2022 study by ProPublica found that landlords accepted up to 90% of the algorithm’s recommendations. It became clear.
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A renter in San Diego, California, first filed a federal lawsuit against RealPage in 2022. RealPage’s lawyers and other defendants responded at the time by saying that users were under no obligation to comply with the company’s software and that the fact that RealPage and other co-defendants participated was irrelevant. Online groups and associations “do not suggest collusion.”
Since then, more than 20 lawsuits on the issue from defendants in various cities, including Seattle, Boston and New York, were consolidated into a complaint filed last year in federal court in Nashville. The latest filings from Arizona and Washington, D.C., join a wave of antitrust complaints RealPage is facing across the country.
Rulings in these cases could affect how landlords set rents and have repercussions across the United States. Tony Constant, a multifamily investment consultant, said the ruling sets a precedent for what kind of software is and isn’t allowed, and prevents future misuse of the technology that could potentially be anti-competitive. It is written that there is a possibility of preventing
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