RealPage, a real estate technology company, is accused of contributing to higher-than-normal rent prices. The DOJ is looking into whether the company's rent-setting software allows landlords to coordinate and raise rent across the nation.
Last month, a report from ProPublica revealed that the YieldStar software used by RealPage helps landlords push the highest possible rents on tenants. The non-public rental rates gathered from the landlords and property managers are used by YieldStar. YieldStar repackages that information in a way that gives landlords access to their competitors' prices.
The rate setting software is used to inflate rental rates.
According to a report by ProPublica, the design of the algorithm has raised questions among real estate and legal experts about whether RealPage has created a new kind of Cartel that allows the nation's largest landlords to indirectly coordinate pricing, possibly in violation of federal law. The RealPage user group is an online forum that allows apartment managers to communicate with one another.
According to The New York Times, rents have gone up by 20 percent. While data from Apartment List indicates that rental prices have decreased slightly over the past couple of months, it's still up by 5.7 percent year over year, and a report from CNBC indicates that rent prices will continue to trend upward According to ProPublica, RealPage discourages landlords from negotiating with tenants because of its software's help to drive up rent.
Some of the nation's biggest property managers, including GreyStar Real Estate Partners, Camden Property Trust, and Mid-America Apartments, all use the service. The company was bought by a private equity firm.
When RealPage announced its plans to acquire Rainmaker Group, the DOJ requested more information from the company. Steve Winn, RealPage's CEO at the time, said the acquisition would allow the service to increase the number of units it sells from 1.5 million to 3 million.
Several US lawmakers have called for federal agencies to investigate ProPublica's findings. A group of senators wrote a letter to the US assistant attorney general, expressing their concerns about the rate setting software. The DOJ is being asked to investigate by the woman who sent out the message.
17 representatives followed up with a letter If anticompetitive practices drive up prices for essential goods and services at a time when a full-time, minimum- wage salary does not provide a worker enough money to rent a two-bedroom apartment in any city across this country, we cannot afford them.
Last week, RealPage CEO Dana Jones was asked a number of questions by two senators, and they are giving the company until December 1st to respond. A number of class action lawsuits accuse RealPage of raising rents. The DOJ and RealPage did not respond to the request for comment.
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