Real Estate Software Aided Price-Fixing “Cartel” Among US Property Companies

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The ultimate outcomes of recent lawsuits may have a precedent-setting impact amid the US’s affordable housing crisis.

A"Rent" sign is displayed on an apartment building in Miami, Florida, on January 20, 2022. The increase in real estate prices in South Florida is one of the highest in the U.S., the correlation there is quite direct. But the origins of the rent and housing crisis itself can seem a bit more diffuse: perhaps some combination of shortages driven by lulls in development .

In effect, the program trains landlords to operate against what was considered conventional industry wisdom: that high occupancy is the best route to high profits. Instead, landlords now trade on RealPage’s key discovery, the strategic innovation that has enabled the algorithm to deliver such outsize returns: if profit is all you care about, then it’s more effective to prioritize income by rent-gouging instead of keeping more units occupied.

While Judge Du saw the algorithmic aspect as a novel application of price-fixing law, Hepner explained that others in the legal system have a different approach: “You have a different school of people, including members of the Federal Trade Commission and Department of Justice, who have argued that price-fixing by algorithm is still price-fixing.

On two occasions, U.S. senators have written letters to the Department of Justice Antitrust Division requesting further, potentially criminal investigation into RealPage. Firstin late 2022, followed in March 2023 by Elizabeth Warren, Tina Smith, Bernie Sanders and Edward J. Markey.

the merger between RealPage and Rainmaker, which supplied the data and instigated the chain of events that brought RealPage software to nationwide prominence, was approvedwho claimed that DOJ staff concerns raised internally at the time “were overridden by political appointees of former President Donald Trump.

“That’s very different in the RealPage cases,” Hepner continued. “The pleadings there suggested that there was actually a very cumbersome process deviate from the recommendations that were being made by RealPage.” Another factor upon which RealPage cases may hinge is the use of public vs. non-public information. It’s perfectly legal for a company to use publicly available information to set prices. But, said Hepner, “If you’re mixing non-public information into that analysis, and that non-public information is being shared with competitors, that, too, can be evidence of an agreement.”

Sarah is hoping that the Arizona lawsuit brought by tenants and AG Mayes’s office against RealPage and its clients might eventually include her own corporate landlord, one of the largest in the region; right now, the company goes inexplicably unnamed in the suit, for reasons unclear.

 

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