The U.S. Department of Justice building in Washington, D.C. (Credit: Jose Luis Magana/AP)
The U.S. Justice Department has filed a lawsuit against multiple major landlords, accusing them of engaging in anti-competitive practices that result in higher rents for Americans. According to the allegations, these landlords have been using an algorithm to determine rent prices and have also been privately sharing confidential information with their competitors to maximize their profits.
The housing market in the United States has been merciless, leaving renters struggling to make ends meet. Unfortunately, incomes have not kept up with the rising cost of rent. Startling statistics reveal that in 2022, a record-breaking number of American renters – half of them, to be exact – spent over 30% of their income on rent and utilities.
Every day, families are forced to make difficult choices between essential needs like medications, groceries, school supplies, and rent. These decisions can be overwhelming and exhausting. Unfortunately, many families find themselves facing eviction notices and enduring lengthy court battles. Shockingly, children bear the brunt of these eviction rates, with a staggering 1.5 million children being evicted each year, as reported by Princeton University’s Eviction Lab.
The housing crisis has been attributed to various factors, including a decline in housing construction in the past decade. However, according to the Justice Department’s lawsuit, significant landlords are also contributing to the problem.
The Department, in collaboration with 10 states including North Carolina, Tennessee, Colorado, and California, is filing charges against six landlords who collectively manage over 1.3 million units in 43 states and the District of Columbia. These landlords are accused of devising a scheme to evade rent reductions.
Greystar Real Estate Partners LLC, a defendant in the case, has declined to provide a comment to The Associated Press. However, the company has published an unsigned statement on its website.
In a statement, Greystar expressed its commitment to conducting business with the highest level of integrity and denied any involvement in anti-competitive practices. The company stated that it will vigorously defend itself against the lawsuit.
The lawsuit claims that the landlords shared confidential information about rents and occupancy with rival companies through various means, such as email, phone calls, or group discussions. The shared information reportedly included details about renewal rates, the frequency of accepting price recommendations from algorithms, the use of concessions like offering a month of free rent, and even their pricing strategies for the upcoming quarter.
The Justice Department has announced that one of the six landlords has agreed to cooperate with prosecutors. As part of the proposed settlement, the company will be subject to restrictions on how they can utilize their competitors’ data and algorithms in order to determine rental prices.
Doha Mekki, the acting assistant attorney general for the Department’s antitrust division, stated in a press release on Tuesday that the action taken against RealPage and six major landlords aims to prioritize people over profits and promote affordable housing for millions of individuals nationwide.
In the ongoing lawsuit against RealPage, several landlords have been included as defendants. RealPage operates an algorithm that provides rental price recommendations to landlords. However, prosecutors claim that this algorithm utilizes sensitive competitive information, enabling landlords to adjust their prices and evade competition that would typically result in lower rents.
According to Jennifer Bowcock, the senior vice president for communications at RealPage, their software is utilized in less than 10% of rental units in the United States. Additionally, she mentioned that their price recommendations are only implemented less than half the time.
According to Bowcock, it is crucial to stop blaming RealPage and its customers for the issue of housing affordability. He argues that the main reason behind high housing costs is the lack of available housing.
