Feds Launch Price-Fixing Investigation Against RealPage Over Rent Hikes

The U.S. Justice Department filed a lawsuit against RealPage, a Texas-based company specializing in pricing software for apartment rentals, on Friday. The lawsuit alleges that RealPage’s software undermines fair competition among landlords and fosters collusion.

According to the DOJ, RealPage’s revenue management software relies heavily on sensitive data exchanged among landlords. This data is purportedly used to create price recommendations for various apartment units. The DOJ pointed out that if such information were exchanged directly in person, it would likely constitute a violation of antitrust laws.

RealPage’s models gather competitive data to influence pricing strategies, enforcing compliance among property managers with its recommendations. The Justice Department emphasized that renters deserve robust competition among landlords, which ideally should help control rent increases in prosperous times and lead to reductions when demand weakens.

The DOJ’s lawsuit follows a 2022 investigation by ProPublica, which raised concerns about RealPage’s practices. The company claims that its systems may suggest rent decreases and do not limit the availability of units. However, the DOJ argues that the overall impact of RealPage’s practices distorts competitive pricing and harms renters.

Currently, approximately 80% of multifamily rental properties in the United States utilize RealPage’s management software. The DOJ contends that this dominance has led to fewer discounts and benefits for consumers, as landlords can easily follow the pricing recommendations without competing against one another.

RealPage is said to endorse policies leading to price increases, with a representative quoted by the DOJ suggesting that collective success is preferable to aggressive competition that could hinder industry growth. The Department argues that this approach contradicts the principles of a free market, where competition should benefit consumers and enhance business performance.

As concerns about affordability mount, advocacy groups have echoed the DOJ’s claims. Monica Burks from the Center for Responsible Lending stated that anti-competitive practices exacerbate challenges for families seeking affordable housing.

RealPage’s software tracks apartment availability and competitors’ pricing changes. When one landlord raises rents, RealPage’s system alerts others, thereby prompting price hikes across the board. The DOJ labeled RealPage’s model as predatory, arguing that its exclusive access to rental data gives it an unfair advantage over other management companies.

The company’s algorithms reportedly allow it to maintain elevated prices, even during periods of low demand, preventing landlords from adjusting rental rates in response to market conditions. This system effectively sets a minimum for pricing, benefiting landlords at the expense of affordability for renters.

allegations in the DOJ’s lawsuit cite violations of the Sherman Act, which regulates monopolies and restricts unreasonable trade agreements. Violating these laws could lead to severe penalties for RealPage, potentially reaching $100 million or higher.

The DOJ is seeking an injunction to halt RealPage’s anti-competitive actions and restore market competition. The lawsuit was filed in the Middle District of North Carolina in conjunction with several state attorneys general from across the country.

North Carolina Attorney General Josh Stein emphasized the importance of housing affordability, declaring, “I will not tolerate any company scheming to block healthy competition among landlords.” RealPage has yet to respond to requests for comments regarding the lawsuit.