On August 23, 2024, The U.S. Department of Justice filed an antitrust lawsuit against RealPage, a real estate software company used by many affordable housing properties, alleging that its software enabled landlords to collude in raising rents across the United States. The lawsuit, supported by eight states (North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington), marks a significant case where an algorithm is central to price-fixing claims.
RealPage’s software, YieldStar, collects confidential data from landlords about rents and occupancy and is accused of generating rent suggestions exceeding market-driven prices. The Justice Department claims this has led to artificially inflated rents for millions of renters.
RealPage, owned by private equity firm Thomas Bravo, advertises its software as a tool for landlords to outperform market rent rates by 3-7%. The company has previously denied any illegal activity, arguing that landlords are not required to follow its pricing suggestions and that factors such as housing undersupply are more responsible for rising rents.
This lawsuit, which is being filed in the Middle District of North Carolina, is part of a broader government effort to regulate the misuse of technology in various sectors, with the Justice Department and Federal Trade Commission also investigating the role of algorithms in price-setting across different industries. The suit against RealPage comes when rent increases and housing affordability have become significant political issues, contributing to inflation and economic challenges leading up to the 2024 presidential election.
In November 2023, the District of Columbia sued RealPage and 14 of the district’s largest landlords, the first such lawsuit by a public agency. Arizona followed in February, accusing RealPage and nine landlords of illegally conspiring to raise rents for hundreds of thousands of renters in the Phoenix and Tucson areas.
Affordable housing operators, including operators of LIHTC properties who use YieldStar, should be aware of this lawsuit and carefully monitor its progress.