The U.S. Justice Department is taking aim at six major landlords for allegedly engaging in price-fixing schemes to keep American renters’ costs high. This comes at a time when the housing market is putting immense pressure on renters, with incomes lagging behind soaring rent prices. The lawsuit alleges that these landlords collaborated on setting rents using algorithms and sharing confidential information to maximize profits.
Struggles of American Renters
Recent data reveals that a staggering half of American renters are spending more than 30% of their income on rent and utilities, reaching an all-time high in 2022. This financial burden forces many individuals and families to make difficult daily choices between essentials like medications, groceries, school supplies, and paying rent. The consequences often include receiving eviction notices and enduring lengthy court battles, with children bearing the brunt of eviction rates.
Justice Department’s Allegations
The Justice Department, joined by 10 states, including North Carolina, Tennessee, Colorado, and California, has accused six landlords operating over 1.3 million units in 43 states and the District of Columbia of colluding to maintain high rents. These landlords purportedly exchanged critical data on rental rates, occupancy levels, renewal rates, and pricing strategies to prevent rent reductions. Such practices perpetuate the affordability crisis faced by millions of Americans.
Response from Landlords
In response to the lawsuit, defendant Greystar Real Estate Partners LLC maintained its innocence, emphasizing its commitment to conducting business with integrity. While the accused landlords reportedly shared competitive information through various channels, one of them has agreed to cooperate with prosecutors. The proposed settlement aims to regulate the use of competitors’ data and algorithms in rent setting to promote fair pricing and competition.
RealPage’s Involvement
RealPage, a key player in the case, operates an algorithm that advises landlords on rental prices. Prosecutors allege that this algorithm facilitates the alignment of prices among landlords, stifling competition that could drive down rents. RealPage’s senior vice president refutes these claims, attributing high housing costs to a housing supply shortage rather than their software’s recommendations.
As the investigation unfolds, the Justice Department’s efforts seek to prioritize people over profits, striving to make housing more accessible and affordable for individuals nationwide. In a landscape marred by housing challenges, this legal action underscores the government’s commitment to upholding fair competition and protecting renters from exploitation.