The U.S. Justice Department on Tuesday sued six of the nation’s largest landlords, accusing them of using pricing algorithms to improperly work together to raise rents across the country.
The lawsuit expands on an antitrust complaint filed by the department in August, which accused property management software maker RealPage of engaging in illegal price fixing to reduce competition among landlords, causing prices and profits to skyrocket. Officials launched a two-year investigation into the scheme after a 2022 ProPublica report showed how RealPage helped landlords set rents across the country, in an approach that legal experts said could lead to cartel-like behavior.
Together, these six landlords manage more than 1.3 million apartments in 43 states and the District of Columbia. Prosecutors have negotiated a settlement with one of them.
“While Americans across the country are struggling to afford housing, the landlords named in today’s lawsuit are sharing information about rental prices,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. of sensitive information and coordinated using algorithms to keep rental prices high. The lawsuit seeks to end “their practice of putting profits over people” and make housing more affordable.
The legal action is the latest development following ProPublica’s initial investigation. Tenants have filed dozens of ongoing federal lawsuits since 2022, when senators introduced legislation seeking to ban the use of rental algorithms similar to RealPage’s. Cities across the country, including San Francisco, Philadelphia and Minneapolis, have also moved to ban landlords from using similar algorithms to set rents.
Federal prosecutors say RealPage’s popular software collected non-public pricing information from multiple property managers, fed it through a common algorithm and then recommended optimal rent levels to those who used it, violating rules prohibiting such coordination. They also accuse landlords of improperly communicating their pricing directly through phone calls, emails and participation in “user group” forums hosted by RealPage.
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The company urges landlords to use an “auto-accept” feature on its software and makes it difficult for property managers to reject its suggestions, authorities said.
RealPage Senior Vice President Jennifer Bowcock called the federal case “flawed” and said the company is “committed to vigorously defending ourselves and our clients against the DOJ’s allegations.” She said that while RealPage believes its technology is legal and “advantageous to compete” but it has changed its software to remove non-public information.
“It’s time to stop blaming RealPage and our customers for housing affordability issues because we have been saying from the beginning that insufficient housing supply is the root cause of high housing costs,” she said.
Three landlords charged in this week’s lawsuit appear in ProPublica’s 2022 report, including Greystar and Camden Property Trust, the largest landlords in the United States.
Camden CEO Ric Campo told news organizations at the time that the apartment market in Houston, where the company is based, is so large and diverse that “it’s hard to say there’s some kind of price manipulation.”
But when Camden adopted emerging rent-setting technology in 2006, the company found that profits were growing even as more tenants moved out.
“The net effect of raising revenue and pushing people out is $10 million in revenue,” Campo told a trade publication at the time. (He later said the quote did not reflect the views he or Camden have on renters today. view. )
Neither Campo nor Camden responded to requests for comment.
Greystar, the largest rental management company and landlord in the United States, said in a statement that it was “disappointed” that the Justice Department included the company in the lawsuit.
“Gray Star has never engaged in any anti-competitive conduct,” the South Carolina-based company said in a statement. “We will vigorously defend ourselves in this lawsuit.”
ProPublica’s analysis of 2022 data also found that Willow Bridge Property Company, formerly Lincoln Residential, manages dozens of buildings in a market with rapidly growing rents. The company did not immediately respond to a request for comment on the Justice Department lawsuit.
One owner-manager, Cortland, has agreed to stop using nonpublic information from competitors to train or run pricing models under a settlement with federal prosecutors. The proposed agreement has been submitted to the court for consideration.
Atlanta-based Cortland manages more than 80,000 rental properties in 13 states. The spokesman said a related federal criminal investigation that led to a raid on its headquarters in May 2024 has concluded.
A spokesman said the company was “pleased” to announce the settlement.
“We believe we were able to achieve this result because Cortland invested many years and significant internal resources to develop a proprietary revenue management software tool that does not rely on external, non-public sources,” the spokesperson said. data.
A spokesman for defendant Cushman & Wakefield said revenue management software could help landlords “effectively” manage rents and avoid discrimination. A spokesperson said that as an administrator, the company does not “set strategy, pricing or occupancy targets,” nor does it decide which software to use or whether to accept any software recommendations.
The lawsuit also names Blackstone Group’s LivCor as a defendant. Blackstone did not immediately respond to a request for comment.
In addition to naming the landlord as a defendant in the lawsuit, the attorneys general of Illinois and Massachusetts were added as co-plaintiffs, bringing the total number of participating states to 10. Thousands of people rent.
RealPage said, “Less than 10% of all rental properties in the United States use RealPage software to recommend rental prices, and our software’s recommendations are accepted by less than half.”
But a December White House report said the number could be higher. RealPage and census data indicate that as many as a quarter of rental companies nationwide use the RealPage pricing algorithm, the report said. The company is said to have higher penetration in some markets.
Using models of competitive markets, the researchers found that tenants in units priced using an algorithm paid an average of $70 more per month, or 4 percent of their rent. The report found that in six major metro areas, monthly costs exceeded $100.
The report estimates that the total incremental cost to renters of using such an algorithm would be approximately $3.8 billion through 2023.
RealPage said the analysis was “riddled with flawed assumptions” and that the White House had never contacted the company about the report.
The fate of the Justice Department lawsuit under the incoming administration is unclear. President-elect Trump has nominated Gail Slater, a veteran antitrust attorney and economic adviser to J.D. Vance, to lead the department’s antitrust division.
