The Department of Justice takes aim at major landlords in a lawsuit alleging rent inflation through algorithmic collusion.
At a Glance
- DOJ sues six large landlords for allegedly using RealPage technology to inflate rents.
- Lawsuit involves 1.3 million rental units across 43 states and D.C.
- Landlords accused of sharing sensitive data on rents and occupancy with competitors
- Action aims to address housing affordability by targeting alleged anti-competitive .practices.
DOJ Takes Legal Action Against Major Landlords
The U.S. Department of Justice has launched a significant legal offensive against six prominent landlords, accusing them of orchestrating a scheme to artificially inflate rental prices. The lawsuit, filed in North Carolina, alleges that these landlords, who collectively manage over 1.3 million rental units across 43 states and the District of Columbia, engaged in anti-competitive practices by utilizing RealPage’s algorithmic pricing technology.
The defendants in this high-stakes legal battle include industry heavyweights such as Greystar Real Estate Partners LLC, Blackstone’s LivCor LLC, Camden Property Trust, Cushman & Wakefield Inc, Willow Bridge Property Company LLC, and Cortland Management LLC. These companies are alleged to have shared sensitive information about rental pricing and market metrics, enabling RealPage’s software to suggest higher rents algorithmically.
Several large landlords in the U.S. are being sued by the Justice Department for allegedly coordinating to keep Americans’ rents high. Here’s what to know. https://t.co/YE05XLWD1X
— FOX 7 Austin (@fox7austin) January 8, 2025
Allegations of Collusion and Data Sharing
At the heart of the DOJ’s case is the accusation that these landlords engaged in a coordinated effort to keep rents artificially high. The lawsuit contends that the defendants shared crucial data on rents, occupancy rates, and pricing strategies with their competitors. This information was then allegedly fed into RealPage’s algorithm, which would suggest rental prices that were higher than what a truly competitive market would bear.
“Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country,” stated Acting Assistant Attorney General Doha Mekki.
The DOJ’s complaint details various methods the landlords allegedly used to coordinate their pricing strategies. These included direct communications about rents and occupancy, conducting “call arounds” to exchange sensitive information, participating in RealPage user groups to discuss pricing tactics, and sharing software parameters. This level of coordination, if proven, would represent a significant breach of antitrust laws.
Industry Response and Implications
The lawsuit has sent shockwaves through the real estate industry, with the accused parties quickly moving to defend their practices. Greystar, one of the largest property management companies in the United States, issued a strong denial of the allegations. “Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices,” the company stated in response to the lawsuit.
RealPage maintains that their software is used on less than 10% of U.S. rental units and that their price recommendations are not always followed by landlords. However, the DOJ’s action suggests that even this level of market penetration could have significant impacts on rental prices across the country.
Potential Outcomes and Next Steps
As part of the legal proceedings, a proposed consent decree with Cortland requires the company to cease using competitors’ data for pricing and to cooperate with the Justice Department’s ongoing investigation. This decree will be published in the Federal Register, allowing for a 60-day public comment period before a final judgment is rendered.
The lawsuit has garnered support from multiple state Attorneys General, with Illinois and Massachusetts joining as co-plaintiffs, bringing the total number of state and commonwealth co-plaintiffs to 10. This broad coalition underscores the nationwide concern over housing affordability and the potential impact of algorithmic pricing in the rental market.
As the legal battle unfolds, the outcome of this case could have far-reaching implications for the rental housing market and the use of data-driven pricing models in the real estate industry. The DOJ’s action signals a renewed focus on addressing housing affordability through antitrust enforcement, potentially paving the way for more competitive and affordable housing practices in the future.
Sources:
- US Justice Department accuses six major landlords of scheming to keep rents high
- Justice Department Sues Six Large Landlords for Algorithmic Pricing Scheme that Harms Millions of American Renters
- DOJ Sues 6 Landlords Over Alleged Algorithm Rent Pricing Scheme
