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RealPage Scandal Widens, Big Tech Firm and Corporate Landlords Slapped with Another Lawsuit

In Featured, News by Patrick Range McDonald

The RealPage scandal continues to widen, with the Big Tech firm slapped with a second lawsuit. This time, the legal action was taken in Seattle over “collusion claims” on student housing, according to Bloomberg Law. RealPage sells software that helps a cartel of corporate landlords jack up rent prices across the nation. A ProPublica investigation first broke the story.

On October 15, ProPublica published an explosive report titled “Rent Going Up? One Company’s Algorithm Could be Why.” It examined the nationwide impacts of YieldStar, a software program owned by RealPage and used by the real estate industry to set inflated rent prices for apartments.  

“The software’s design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation’s largest landlords to indirectly coordinate pricing, potentially in violation of federal law,” wrote ProPublica reporter Heather Vogell.

She continued: “Experts say RealPage and its clients invite scrutiny from antitrust enforcers for several reasons, including their use of private data on what competitors charge in rent. In particular, RealPage’s creation of work groups that meet privately and include landlords who are otherwise rivals could be a red flag of potential collusion, a former federal prosecutor said.”

Vogell added, “At a minimum, critics said, the software’s algorithm may be artificially inflating rents and stifling competition.”

She also noted that “at times [RealPage] has appeared to urge apartment owners and managers to reduce supply while increasing price,” a cutthroat strategy that was executed by Camden Property Trust CEO Ric Campo. “The net effect of driving revenue and pushing people out was $10 million in income,” he told a trade publication. “I think that shows keeping the heads in the beds above all else is not always the best strategy.”

RealPage has an enormous, global influence on the rental housing market: the company “serves over 19 million units worldwide from offices in North America, Europe, and Asia,” according to its website.

In the U.S., Realpage has offices in Northport, Alabama; Irvine and San Diego, California; Lombard, Illinois; Boston; New York City; Charlotte and Raleigh, North Carolina; Bend, Oregon; Philadelphia; Greenville and West Columbia, South Carolina; Richardson and Waco, Texas; and South Burlington, Vermont.

Outside the U.S., the Big Tech firm has offices in Barcelona, Spain; Cebu City and Pasig City, Philippines; Hyderabad, India; London; and Medellin, Colombia.

Soon after the exposé was published, an antitrust lawsuit against RealPage and several corporate landlords, including Equity Residential and Essex Property Trust, was filed in San Diego. 

Housing Is A Human Right recently published two scoops about the unfolding scandal. First, Housing Is A Human Right found that RealPage shelled out a total of $1 million in campaign cash to kill rent control ballot measures in California in 2018 and 2020, respectively. The other was that Equity Residential and Essex Property Trust also delivered tens of millions in campaign contributions to stop those same measures, Proposition 10 in 2018 and Proposition 21 in 2020.

Last week, Bloomberg Law reported that RealPage was facing another lawsuit.

“RealPage Inc. and leading residential landlords, already facing antitrust litigation over their alleged scheme to drive up nationwide rental prices, were hit with a second proposed class action claiming the conspiracy has had an outsized impact on the student housing market,” wrote Bloomberg legal reporter Mike Leonard.

He added: “The suit, filed in Seattle, accuses them of colluding to avoid price competition through data analytics software made by RealPage, rather than competing to attract renters. The software, based on algorithmic pricing mechanisms, allegedly includes other functions that let members of the cartel police one another.

“The core of the conspiracy is an agreement among the property managers to set prices through RealPage’s software, which relies on real-time access to sensitive commercial data, while staying ‘disciplined’ and tolerating empty units instead of undercutting one another, according to the complaint.”

The Seattle lawsuit also took aim at big-time corporate landlords, including GreyStar, run by chairman and CEO Bob Faith (pictured above); Cushman & Wakefield, led by executive chairman Brett White; and Apollo Global Management, run by chief executive officer Marc Rowan. The plaintiff is University of Washington student Gabriel Navarro.

In addition to the lawsuits, U.S. Sen. Sherrod Brown, of Ohio, wants the Federal Trade Commission to carry out an antitrust review of RealPage.

Housing justice activists have long said that corporate landlords’ predatory business practices have fueled unfair, excessive rents and the housing affordability crisis. Activists have demanded that elected officials must pass rent control to rein in Big Real Estate. 

Interestingly, California YIMBY, the statewide lobbying group that’s financed by Big Tech executives and pushes trickle-down housing policies that enrich Big Real Estate companies, has been virtually silent about the damage caused by corporate landlords. It isn’t surprising. The tech industry has increasingly moved into the real estate business. 

“Proptech companies have proliferated on the real estate scene,” explained The Real Deal, a kind of trade magazine for the real estate industry, “and tens of billions of dollars of [venture capital] funding has flooded the sector in recent years.” 

Big Tech’s California YIMBY also refused to endorse Prop 10 in 2018 and Prop 21 in 2020, even though the measures were backed by a broad coalition of housing justice organizations, social justice groups, and labor unions.

The RealPage scandal only underscores the need to better regulate Proptech, Big Tech, and Big Real Estate – and the need to pass rent control. Perhaps better than any other tool, rent control will immediately and effectively rein in the tech industry’s and corporate landlords’ predatory business practices that cause sky-high, excessive rents throughout the country, with middle- and working-class tenants suffering the worst consequences.

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