Rents across the country have skyrocketed thanks in part to YieldStar that takes the human element out of housing and hikes prices on behalf of landlords, a handy tool for real estate owners and a nightmare for tenants.
One of the main selling points of the software is the fact that rents have gone up over the last year.
Texas-based RealPage created YieldStar, an analytic tool that helps landlords set rental prices.
It's played an outsize role in increasing rents across the country according to its executives' messaging and information reviewed by ProPublica.
Despite the fact that millions of Americans are feeling the squeeze right now, RealPage's leadership argues that it is actually a desirable thing.
"As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually," Andrew Bowen said during a real estate tech conference during the summer of 2021.
The record-setting rental prices increases that happened after the drop of 2020 and early 2021.
According to recent data, single bedroom apartment rents have continued to rise in 46 out of 47 US states. Half of the states experienced an increase.
Though the company's been around since 1998 and is far from the only rent-setting software out there, a controversial merger between RealPage and one of its competitors led to its clients controlling 19.7 million of the US' 45 million total rental units by 2020.
The prices for almost half of the rental units in the country were influenced by an computer program.
It's worrying that not much is known about the YieldStar algorithm. We don't know much about it, so it's troubling.
The sharing of anonymous rental price data with other landlords is possible because of the algorithm.
In response to ProPublica's questions, RentPage acknowledged that the price-sharing practice could seem anti-competitive, but countered that landlords figure out their competitors by phone.
Jeffrey Roper, a former Alaska Airlines executive, said that removing the human element of pricing decisions was a net good for revenues, and that if they could get landlords to raise rents, it would benefit the whole group.
Roper said that the company's internal belief is that landlords have too much empathy when it comes to pricing rents, especially when the people they're renting to come from similar income.
It's obvious from RealPage's happy customers that they're thrilled with the results, and in company testimonials, property managers intimated that YieldStar is something of a secret weapon.
"The beauty of YieldStar is that it pushes you to go places that you wouldn't have gone if you weren't using it," Kortney Balas said in a RealPage testimonial.
A nationwide housing crisis marked by soaring rents, stretching tenants to their absolute limits, is what most of these testimonials fail to acknowledge.
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