Washington’s case
Many landlords used RealPage to help determine appropriate rental prices for apartments.
According to the lawsuit, Washington property managers used this software to price out an estimated 800,000 leases in the state between 2017 and 2024.
As the AG’s investigation revealed, RealPage’s pricing software uses nonpublic, competitively sensitive market information. In general, the algorithm tended to suggest raising rents. For some renters, the suggestions led their landlords to impose steep rent increases.
Chris Vialpando, a renter in Seattle’s Lower Queen Anne neighborhood, experienced a 50% rent increase after his landlord started using RealPage to price rental units.
“I was almost homeless for a short second there because I really had to dig deep to figure out how I was going to do it,” Vialpando told K5.
His story is one of many that sparked the AG’s office to take action.
The complaint alleges that based on participating landlords and their rivals’ competitively sensitive information, these landlords were able to avoid having to compete independently to attract renters based on pricing, discounts, concessions, lease terms and other lease terms — as they would have to in a free market.
It also alleges that RealPage used this scheme and its “substantial data trove” to maintain a monopoly in the commercial revenue management software market.
Finally, the investigation found that RealPage’s rental price suggestions generally lead to higher costs for renters.
Brown's release alleges the RealPage tool violates Washington’s Consumer Protection Act, which is designed to keep the state free of unfair and deceptive business practices.
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Learn MoreHow price fixing impacts renters
The crux of the price-fixing scheme is the fact that landlords shared sensitive data with RealPage. In turn, landlords used the tool knowing that other landlords contributed sensitive data to the algorithm.
One potential client of RealPage said, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing.”
A big red flag is that the RealPage software makes it difficult for a landlord to avoid taking the software’s suggestions.
Instead, it suggests accepting the price recommendations automatically. If a landlord using the software wanted to charge a different rate, they must provide a reason to the company.
Additionally, RealPage recommended landlords enforce 13-month rental terms. This long timeline prevents too many units from hitting the market at the same time, which helps keep rent rates higher.
From a landlord's point of view, the tool offers an opportunity to charge more for rent. But colluding with other landlords isn’t legal because it doesn’t allow for the market forces of supply and demand to settle at a reasonable and fair market rate.
As of writing, the average rent for a 699-square-foot apartment in Seattle is $2,252. Within the state, the Washington State Standard reports approximately one-third of households spend more than 30% of their household income on housing costs, making them “cost-burdened.”
Unfortunately, this pressure can put many renters into unstable housing situations that sometimes lead to homelessness.
While the impacts of artificially high rents based on RealPage recommendations initially only impacted the renters unlucky enough to have a landlord using RealPage, it’s likely the higher rents rippled out into the marketplace.
With that, these actions may have gone beyond displacing individual families to put additional pressure on housing affordability and possibly worsened the housing crisis.
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