‘Unlawful scheme.’ Justice Department says DFW company shares blame for soaring rents
The U.S. Department of Justice and attorneys general from eight states — Texas not among them — have sued real state company RealPage, accusing the Richardson-based firm of illegally fixing rent prices above market rates.
The 115-page lawsuit claims landlords use the company’s software to share and standardize confidential pricing and lease information. This collusion, prosecutors argue, amounts to an “unlawful scheme” that stifles healthy competition among property owners and artificially jacks up rents in the process.
“Renters are entitled to the benefits of vigorous competition among landlords. In prosperous times, that competition should limit rent hikes; in harder times, competition should bring down rent, making housing more affordable,” the DOJ’s complaint reads. “RealPage has built a business out of frustrating the natural forces of competition.”
The company has dismissed the allegations as frivolous and misinformed.
The lawsuit arrives at a moment of intense financial stress for the nation’s tenants. Rents across the country have soared since the early 2010s, especially in major metro areas.
The Dallas-Fort Worth Metroplex hasn’t been spared from the price surge. More than half of DFW renters today are cost-burdened, meaning they spend more than 30% of their monthly income on housing and apartment expenses. The National Low Income Housing Coalition, a nonprofit research group, finds that the Metroplex, among major urban centers, has one of the nation’s worst shortages of affordable rental units.
RealPage, critics allege, is exacerbating the crisis. Participating landlords feed the firm’s pricing software non-public information about their lease terms and possible fees. Its algorithm synthesizes the data and shoots out a rent price recommendation, which most property owners tend to follow. The process, prosecutors claim, is designed to keep property owners from competing “against one another in away that actually keeps the entire industry down.”
“RealPage replaces competition with coordination. It substitutes unity for rivalry. It subverts competition and the competitive process,” the complaint reads. “It does so openly and directly — and American renters are left paying the price.”
The company says government officials are blaming it for affordability woes beyond its control.
“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” Jennifer Bowcock, a RealPage spokesperson, wrote in a statement.
Ballooning rents, the firm argues, are instead the product of normal market pressures — spiking demand, inflation, and under-construction chief among them.
“It is merely a distraction from the fundamental economic and political issues driving inflation throughout our economy – and housing affordability in particular – which should be the focus of policymakers in Washington, D.C.,” Bowcock said.
This story was originally published August 26, 2024 at 12:26 PM.
