U.S. government accuses RealPage of enabling landlord collusion

Blaming landlord collusion for sky-high rent prices is no longer a Democratic conspiracy theory—it’s now the center of a lawsuit filed by the Department of Justice (DOJ).

Last week, the DOJ filed an antitrust lawsuit against RealPage, claiming that the software management company conducted an “unlawful scheme” to reduce competition in the rental market.

Specifically, the suit alleged that RealPage trains its algorithm to make pricing recommendations using landlord data that isn’t available to the public. The DOJ said this “allows landlords to manipulate, distort, and subvert market forces.”

“Everyone knows the rent is too damn high, and we allege this is one of the reasons why,” said Attorney General Merrick Garland. “Antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert.”

“We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents,” said Garland.

RealPage denied the collusion allegations, claiming that the DOJ is using the company to “scapegoat pro-competitive technology.”

The Texas-based company has been in regulators’ crosshairs for years, having faced more than 30 lawsuits in state and federal courts. Meanwhile, rent prices have continued to soar due to a combination of housing shortages, remote work trends, and a lack of affordable units.

Rent prices remain elevated

Although rent prices have declined from their mid-2022 peaks, overall prices remain elevated across the U.S.

According to Realtor.com, the median asking rent in the country’s 50 largest metros was $1,741 in July—down only $13 from its record high in August 2022. Notably, average rents are still 19.8% higher compared to pre-pandemic levels.

The biggest jump in average rents has been for two-bedroom apartments, climbing 21.7% compared to July 2019 to reach $1,933.

Using various housing affordability metrics, Redfin research determined that 61% of Americans can’t afford a typical apartment at current prices. Redfin defines rental affordability as spending up to 30% of one’s annual income on housing costs, which includes rent and utility payments.

“Many U.S. renters are and will remain burdened by the cost of having a roof over their head, and unlike homeowners, they’re not building wealth through rising property values,” said Redfin senior economist Sheharyar Bokhari.

Although policymakers and economists have blamed a housing shortage for rising rents, other experts say there aren’t enough affordable units in the country.

Research from the University of Kansas and The New School determined that housing affordability constraints are mostly due to a combination of low incomes and high prices rather than an absolute shortage of units.

This means America can’t simply build its way to affordability; it needs to offer developers better incentives to construct affordable units.

Perhaps the only silver lining for renters today is that renting is much more affordable than homebuying. According to Creditnews Research, it’s cheaper to rent than to buy in all 100 of the country’s largest metros.