Senate Democrats Call for New Probe Into Allegations RealPage’s Algorithm Suggests Inflated Rental Prices to Landlords

Minnesota Senator Amy Klobuchar together with different Senate Democrats are calling for an investigation into the actual property monopoly guided by RealPage, a software program utilized by some landlords to set month-to-month hire costs for residences.

Klobuchar, chair of the Senate Subcommittee on Competition Policy, Antitrust and Consumer Rights, authored a letter addressed to the Department of Justice’s Assistant Attorney General for Antitrust. She’s calling for an investigation into RealPage’s potential anticompetitive practices in inflating hire costs utilizing an algorithm fueled by non-public information collected from the corporate’s actual property purchasers. The letter was additionally signed by Senator Richard Durbin of Illinois and Senator Cory Booker of New Jersey.

“We are concerned that the use of this rate setting software essentially amounts to a cartel to artificially inflate rental rates in multifamily residential buildings,” reads the letter. “The conduct in these markets raises significant anticompetitive concerns. We are aware that the Division has taken an aggressive posture in assessing and investigating potential anticompetitive conduct, including considering how algorithms could facilitate collusion in novel ways.”

ProPublica revealed RealPage’s invisible hand in an article printed final month. RealPage’s software program known as YieldStar and its algorithm makes use of information the corporate collects from purchasers, which may embrace competitor costs, with a view to recommend a advisable hire for landlords to cost their tenants. RealPage has since acquired a heavy portion of the actual property market—ProPublica discovered that in a single Seattle neighborhood, 10 property homeowners oversaw 70% of residences and all 10 used RealPage’s software program. The outlet’s investigation discovered that hire was usually steady or barely raised in residences that weren’t managed with RealPage software program.

The drawback right here is clear: Tenants are now not in a position to negotiate a remaining hire value with landlords as the various set costs based mostly on RealPage. While property values and rents are certain to naturally improve in the actual property market, RealPage govt Andrew Bowen claimed at a convention final 12 months that RealPage was driving the worth hikes, as quoted in ProPublica’s piece.

It’s not a straightforward time to be a renter, particularly within the bounce again from diminished rents in the course of the top of the covid-19 pandemic. A New York Times report discovered that Jersey City, New Jersey—situated throughout the river from one of many U.S.’s busiest metropolitan areas—had the very best nationwide hire value with a median price of $5,500. Likewise, CNN reported earlier this 12 months that the nationwide median hire jumped up 17% to $1,792 in February 2022.

Renters are seemingly trapped in a by no means ending cycle. As rents rise meteorically, many tenants are usually not in a position to save sufficient cash to put money into their very own actual property fairness and are pressured to maintain renting at sky-high costs.