The Attorney General for the District of Columbia (DC) Brian Schwalb announced on Wednesday a lawsuit against 14 of the city’s largest landlords. The complaint alleges that these landlords colluded with RealPage, a rental management software, to artificially inflate rental prices in the city.
In a video statement published on his X (formerly Twitter) page, Schwalb likened the conduct of the landlords to a “housing cartel.” According to the complaint, the landlords collectively set rent prices based on RealPage’s technology. They also agreed to unlawfully “exchange competitively sensitive data.” If true, the conduct potentially violates the District of Columbia Antitrust Act.
RealPage’s revenue management software allegedly collected non-public data from the DC area, then used an algorithm to generate a revenue-maximizing rental price. Apparently, using RealPage’s software increased rent profits by between two and seven percent. Through communications and written agreements, the landlords agreed to delegate rental price setting to RealPage. Additionally, according to Schwalb, RealPage then enforced compliance with this agreement. When a rental owner attempted to “override” the RealPage price for the unit, they were contacted by a RealPage representative. If the representative could not “persuade” the owner to comply with the RealPage price, the issue was escalated to higher management.
The conduct by the parties was a marked change from the traditional “free marketplace” of rental prices, where competition usually drives costs down. Specifically, the Office of the Attorney General (OAG) argued that the conduct violates § 28-4502 of the DC Code, which prohibits contract, combination or conspiracy to restrain trade.
The allegations by the OAG seem to be corroborated by independent data, which shows a stark increase in rental prices in the DC area over the last several years. Many of the named defendants began using RealPage technology under 5 years ago. Between 2021 and 2022, the average price of a studio apartment increased by 23 percent. The median income in that time frame increased by just 3.9 percent. The average price for a studio apartment is currently $2,358 per month, which is about half of the average monthly income in the area. The 14 real estate companies named in the complaint are all large corporations, not just from DC, but from places like Houston and Seattle as well. The properties of these landlords represent over 58,000 of the available multi-family housing units.
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