U.S. renters spent an extra $3.8 billion last year because of pricing algorithms used by landlords
The White House has accused RealPage, a rental pricing algorithm widely used by landlords and property managers, of contributing an additional $3.8 billion to tenants’ rent costs in 2022.
For years, the White House has alleged that RealPage’s software skews the market in favor of landlords by facilitating rental price increases, placing an unfair burden on renters. These accusations culminated in an antitrust lawsuit filed in August, claiming the pricing algorithm enabled coordinated rent hikes among landlords.
Allegations and Findings
Government researchers used RealPage’s software to compare rents set by the algorithm with those determined individually by landlords. The analysis revealed that properties using RealPage’s algorithm charged an average of $70 more per month. In cities with high usage of the software, such as Atlanta—where 68% of landlords employ it—renters paid an average of $181 more per month, according to the findings.
Legal Challenges
While the Justice Department initially pursued legal action, it recently dropped the lawsuit following a change in administration. RealPage maintains that this decision vindicates its practices, but the DOJ’s analysis suggests otherwise.
“Their conclusions are based on the erroneous assumption that all property managers are setting coordinated rents, but that is not how RealPage’s revenue management software (RMS) works,” the company stated.
Impact on the Housing Crisis
The accusations against RealPage are part of a broader narrative about its impact on housing affordability. Eight states, along with class-action lawsuits, have targeted the software company for its role in prioritizing rent increases over occupancy rates. Critics argue this practice has amplified profits for landlords while exacerbating the housing crisis in cities like Atlanta, Boston, Phoenix, Seattle, and Washington, D.C.
As the debate continues, RealPage remains a focal point in discussions about the intersection of technology and the housing market.