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Federal Bureau of Investigation (FBI) carried out An unannounced raid on national corporate landlord Cortland Management on May 22 intensified the investigation into an alleged rental price cartel conspiracy that may already be affecting millions of Americans.
The surprise raid is reportedly part of a criminal antitrust investigation into RealPage by the U.S. Department of Justice (DOJ). $9 billion A software company recommends raising rents for millions of homes across the US
Par Real Page blog PostsBased in Atlanta, Georgia, Cortland is Ownership The real estate agency, which owns about 85,000 apartment units as of June 2022, uses RealPage’s algorithms to “ensure consistent vendor pricing in communities from Arizona to Georgia.”
RealPage’s impact is most noticeable in Atlanta, where software-based pricing influences over 80% of rental properties. Since 2016, rents in the city have increased by 80% —And rising vacancy rates aren’t driving prices down.
Apartment building. Photo credit: Getty Images
According to multiple studies, the problem with RealPage is Litigation The biggest issue in lawsuits filed over the past two years in states including California, Arizona and New York is that the company’s algorithms increase rents based on data it collects from landlords, not based on demand.
Arizona Attorney General Chris Mays said in February in announcing the lawsuit against RealPage that the landlords “were not competing at all.”
“They were in collusion,” Mays said.
According to the Arizona lawsuit and other lawsuits, landlords provided RealPage with detailed information about rents, rental terms, amenities, move-out dates and occupancy rates.
“RealPage used this confidential data to tell its competitors which properties to rent, when to rent them, and for how much,” Mayes said. “This was not a fair market, it was a fixed market.”
Related: State attorney general sues RealPage and landlords for ‘astronomical’ rent hikes: ‘This was not a fair market’
RealPage’s influence is undeniable. DC Lawsuit We found that 60% of apartments in the area were priced using RealPage. Phoenix, Arizona70% of the apartments were owned or managed by companies using the company’s software.
As of 2020, over 16 million rental properties across the United States use RealPage’s algorithm. Blog Post.
“Given that there are currently approximately 22 million investment-grade apartments available in the U.S., this represents a very large percentage of the total inventory in the country,” Tracy Saffos, industry head at RealPage, said in the same post.
Related: Where in the U.S. are rents falling the most?
The impact RealPage is having on renters is evident among the company’s executives.
Asked about the role that RealPage’s technology has played in driving up apartment rents, RealPage executive Andrew Bowen said: Said The software “drives” it.
“As a property manager, very few people would want to manually increase rents by double digits in less than a month,” Bowen said.
RealPage He told CNBC Landlord clients don’t have to take advantage of algorithmically recommended rent increases. A 2022 investigation by ProPublica It turns out that homeowners accepted 80-90% of the algorithm’s suggestions.
RealPage sent “price advisors” to meet with landlords face-to-face and track usage of recommended rates, according to a lawsuit filed against the company in Arizona in February.
Rent inflation has outpaced overall inflation over the past decade. 40.7%.
Related: CPI Report: Inflation continues on rising rent and gas prices