HOUSING - Across the country, tenants are hitting back after a ProPublica investigation found that RealPage, a Big Tech firm based in Texas, helps a cartel of corporate landlords to wildly inflate rents. So far, RealPage and its corporate clients have been slapped with more than 20 lawsuits. Essex Property Trust, Equity Residential, and AvalonBay Communities are among the corporate landlords that have been named in legal filings.
On October 15, ProPublica published an explosive report titled “Rent Going Up? One Company’s Algorithm Could be Why.” It examined the nationwide impacts of YieldStar, a software program owned by RealPage and used by the real estate industry to set inflated rent prices for apartments.
“The software’s design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation’s largest landlords to indirectly coordinate pricing, potentially in violation of federal law,” wrote ProPublica reporter Heather Vogell.
She continued: “Experts say RealPage and its clients invite scrutiny from antitrust enforcers for several reasons, including their use of private data on what competitors charge in rent. In particular, RealPage’s creation of work groups that meet privately and include landlords who are otherwise rivals could be a red flag of potential collusion, a former federal prosecutor said.”
Vogell added, “At a minimum, critics said, the software’s algorithm may be artificially inflating rents and stifling competition.”
She also noted that “at times [RealPage] has appeared to urge apartment owners and managers to reduce supply while increasing price,” a cutthroat strategy that was executed by Camden Property Trust CEO Ric Campo. “The net effect of driving revenue and pushing people out was $10 million in income,” he told a trade publication. “I think that shows keeping the heads in the beds above all else is not always the best strategy.”
RealPage has an enormous, global influence on the rental housing market: the company “serves over 19 million units worldwide from offices in North America, Europe, and Asia,” according to its website.
In the U.S., Realpage has offices in Northport, Alabama; Irvine and San Diego, California; Lombard, Illinois; Boston; New York City; Charlotte and Raleigh, North Carolina; Bend, Oregon; Philadelphia; Greenville and West Columbia, South Carolina; Richardson and Waco, Texas; and South Burlington, Vermont.
Outside the U.S., the Big Tech firm has offices in Barcelona, Spain; Cebu City and Pasig City, Philippines; Hyderabad, India; London; and Medellin, Colombia.
Many of RealPage’s corporate clients also operate in multiple cities.
Since the publication of ProPublica’s report, more than 20 lawsuits have been filed against RealPage and numerous corporate landlords, according to the website Law360. The lawsuits have been filed in federal court in states across the United States, including Washington state, Tennessee, Colorado, Massachusetts, Texas, and California. At least one lawsuit has been filed in Washington D.C. RealPage and its clients will undoubtedly face more legal action in the coming months.
With the scandal only widening, numerous Congress members have called for a federal investigation into RealPage’s business practices – Housing Is A Human Right also demanded a thorough federal investigation soon after the ProPublica investigation was published. And Housing Is A Human Right reported an exclusive: RealPage had shelled out $1 million to kill ballot measures in California that would have ended statewide rent control restrictions.
In fact, several of RealPage’s clients who are named in the federal lawsuits were also major campaign contributors to stop those rent control initiatives, known as Proposition 10, in 2018, and Proposition 21, in 2020. Housing Is A Human Right and its parent organization, AIDS Healthcare Foundation, led a broad coalition of housing justice groups, social justice organizations, and labor unions to pass those ballot measures. But Big Real Estate spent a whopping total of $175.4 million to successfully defeat Prop 10 and Prop 21.
Corporate landlords named in the RealPage lawsuits who also delivered tens of millions to the No on Prop 10 and No on Prop 21 campaigns include Essex Property Trust, which laid out a total of $26.2 million to stop Prop 10 and Prop 21; Equity Residential, which gave a total of $17.9 million; and AvalonBay Communities, which shelled out $17 million. Those real estate companies are among the largest corporate landlords in the country.
Prop 10 and Prop 21 would have allowed localities to create new or expanded rent control policies, reining in the predatory business practices of RealPage and its corporate clients and preventing them from wildly inflating rents. To avoid that fate, RealPage and its clients vigorously opposed the ballot measures.
Housing Is A Human Right and other housing justice groups have long said that corporate landlords’ excessive rents have fueled the housing affordability and homelessness crises, and that they needed to be better regulated by passing rent control. The RealPage scandal is only more proof that statewide rent control restrictions in California must be repealed so local governments can use rent control to protect tenants against Big Real Estate and, now, Big Tech.
(Patrick Range McDonald is a best-selling author and award-winning journalist. A longtime staff writer at LA Weekly, McDonald is now the advocacy journalist for Housing Is A Human Right, the housing advocacy division of AIDS Healthcare Foundation, and a contributor to CityWatch. )