Who is Behind the Surging Rent Prices in America?
Are you tired of your rent going up? One popular software tool could be to blame.
RealPage is a Texas-based company that developed and uses a proprietary algorithm called YieldStar to help landlords charge the highest possible rents to tenants.
RealPage’s rent-setting algorithm draws from private competitor data on the actual rent tenants paid, as opposed to publicly advertised rent. They also sponsor meetings that gather competitors to discuss pricing. This information is shared with landlords through the platform.
The price difference between RealPage-priced buildings and non-algorithm-priced buildings is considerable. In a downtown Seattle ZIP code, rent for a one-bedroom in a RealPage-priced building rose by 33% in one year, compared to just 3.9% over the same period for another tenant in a non-algorithm-priced building, per ProPublica.
Trust the market efficiency? Renters will just go to the cheaper buildings. In some markets, they can’t, given the scale of RealPage’s clientele.
RealPage’s customers include the ten largest multifamily property management companies in the U.S., and they manage more than 24 million units worldwide. So, in some markets, tenants are beholden to prices set by landlords using the same software with an algorithm that’s aware of each other’s prices.
If it sounds illegal, it’s cause it might be. More than 30 lawsuits allege RealPage colluded with several large landlords to increase prices artificially.
Next time your landlord tries to increase your rent, perhaps a double-digit increase within a single month, it might be because of RealPage’s software.
