This fall, renters across the U.S. felt a sigh of relief. October brought some good news, as reported by the Wall Street Journal: rent prices are stabilizing after a steep rise due to the pandemic. The national average rent dipped by 0.3% from August, and while that might not seem like much, it marks the biggest decrease for September in the last 15 years.
So, what’s causing this unexpected shift? It turns out that the overabundance of new apartments constructed during the recent building boom is taking longer to be absorbed than anticipated. Even though the pace of new multifamily construction is slowing down, landlords are likely to struggle with raising prices amid this increased supply.
Interestingly, an important factor in the housing price crisis wasn’t highlighted in the WSJ article. Just about a month after its publication, this issue came back into the spotlight during the hectic Thanksgiving preparations. The Justice Department settled a lawsuit that could have significant effects on renters nationwide—something that conservative media didn’t give much attention to, including FOX News, which likely downplayed it.
Now, let’s get to the crux of the matter, peeling back the layers of complicity in this situation.
Massive private equity firms, like Greystar and Cortland, employ software from RealPage, which is also backed by private equity and operates out of Texas. That software has allegedly been contributing to inflated rent prices for years. An investigative piece by Heather Vogel in October 2022 from ProPublica revealed a disturbing connection between RealPage and the surging rental prices in the aftermath of COVID-19. It was eye-opening, shedding light on a potential conspiracy that prompted state and federal governments to take action.
According to the investigation, RealPage was gathering real-time data on pricing and supply and using that to dictate specific pricing strategies. This info was reportedly shared amongst corporate landlords, enabling them to artificially keep rental prices high and impose various fees on tenants, while also complicating efforts for landlord employees to reduce rents.
One of RealPage’s executives, Andrew Bowen, even bragged that the software was effective in keeping rents elevated. He noted the absurdity of property managers manually increasing rents drastically within a short time frame.
This presents a troubling picture of possible illegal price-fixing—a concern that led the Biden Justice Department to file an antitrust lawsuit earlier this year. Eight other states joined in with their litigation against RealPage.
In a somewhat surprising twist, on November 25, a settlement was announced regarding the lawsuit. While it may have seemed minor, many viewed it as a victory for renters and families.
Interestingly, RealPage seemed rather pleased with the outcome. They avoided any fines or admissions of guilt. In a statement, the company expressed confidence that their revenue management tools could now operate under the rules of federal antitrust enforcement.
This notion that RealPage somehow aids renters is, frankly, hard to believe. Reports say that states involved in the original lawsuit didn’t agree to the proposed settlement. It raises questions about the legitimacy of the resolution.
Furthermore, even RealPage’s attorney portrayed the situation in a manner that starkly differed from the Justice Department’s view. Meanwhile, RealPage has now escalated its legal actions, citing a new lawsuit in New York state in response to recent regulations aimed at curtailing algorithmic rent setting.
Some observers, however, have raised concerns regarding the settlement’s loopholes. Critics have pointed out that while restrictions on sharing sensitive data exist, RealPage still retains access to historical data to inform its algorithm, potentially nullifying much of the intended regulatory impact.
It’s curious to note that the settlement includes a monitor that will oversee compliance—but only for three years, conveniently corresponding to the end of Trump’s term.
This episode is yet another example of the Trump administration allegedly siding with powerful corporations instead of standing up for everyday Americans. RealPage, private equity, and similar interests appear to be benefitting at the expense of regular people, making this a troubling betrayal amid ongoing economic challenges.
