The U.S. Justice Department is suing a number of big landlords for allegedly conspiring to keep prices high for Americans by sharing private information with their rivals to increase profits and using an algorithm to assist set rents.
The case comes as tenants in the United States continue to face hardships due to a harsh housing market where salaries aren’t keeping up with rent increases. According to the most recent data, in 2022, half of American renters paid an all-time high of over 30% of their income on rent and utilities.
This entails making tedious daily choices between rent, groceries, school supplies, and prescription drugs. Children experience the greatest eviction rates, with 1.5 million being evicted annually, according to Princeton University’s Eviction Lab. This results in eviction notifications and drawn-out court processes.
Although there are a number of reasons for the housing issue, such as a decline in the number of new homes constructed in the past ten years, the Justice Department’s case asserts that large landlords are contributing to the problem.
Six landlords, who together manage over 1.3 million units in 43 states and the District of Columbia, are being accused by the agency and ten states, including Oregon, of plotting to keep rents from going down.
In response to The Associated Press’s request for comment, the landlord Greystar Real Estate Partners LLC, a defendant in the case and the owner of a website listing over 70 properties in the Portland region, posted an unsigned statement on its website.
Greystar has always operated with the highest integrity. According to the statement, Greystar never engaged in any anti-competitive behavior. In this litigation, we will firmly defend ourselves.
According to the lawsuit, the landlords shared private information about rents and occupancy with rival companies by phone, email, or group chat. Renewal rates, the frequency with which they accept price recommendations from algorithms, the utilization of discounts like giving away a month, and even their strategy for pricing for the upcoming quarter were among the purportedly disclosed details.
One of the six landlords consented to work with prosecutors, according to the Justice Department. The proposed settlement would limit the company’s ability to establish rents using the data and algorithms of its rivals.
Doha Mekki, the acting assistant attorney general for the department’s antitrust division, stated in a press release on Tuesday that the action against RealPage and six significant landlords today aims to stop their practice of prioritizing profits over people and make housing more affordable for millions of people nationwide.
An existing case against RealPage, which uses an algorithm to suggest rental prices to landlords, now includes those landlords. According to prosecutors, the algorithm aligns prices and prevents competition that would otherwise drive down rents by using sensitive competitive information.
In a response to the AP, Jennifer Bowcock, senior vice president for communications at RealPage, stated that less than 10% of rental properties in the United States utilize their software, and less than half of those units employ their price suggestions.
When the undersupply of homes is the primary reason of high housing costs, it’s time to stop using RealPage and our customers as scapegoats for housing affordability issues, Bowcock stated.
— The Associated Press’s Jesse Bedayn
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