How Landlords are Using Tech to Skyrocket Your Rent

Big-time apartment owners have a secret weapon up their sleeves, and it’s not a mystical charm or a hidden treasure map—it’s a Texas-based company called RealPage. This company specializes in providing software to property managers that helps them not only set rents but also maximize their profits. While this may sound like a dream come true for landlords, critics argue that this partnership between RealPage and apartment managers has emboldened property owners to raise rental prices indiscriminately, even if it means leaving units unoccupied when tenants are priced out.

Without the influence of RealPage, opponents of the software believe that landlords would be more cautious and strategic in their rent adjustments, focusing on maintaining full occupancy rather than simply chasing higher profits. The software, known as “Revenue Management,” has become a prevalent tool in the real estate industry, affecting a significant portion of the rental market in major US cities. For instance, estimates from Arizona’s attorney general suggest that around 70% of apartment units in the Phoenix metropolitan area are owned or managed by entities that rely on RealPage’s price recommendation software.

The reach of RealPage extends further than just the Southwest, with the Washington, DC attorney general revealing that over 30% of multifamily units in the district, and 60% of units in larger buildings with 50 or more units, have their rents determined by the software. RealPage’s methodology for generating these price recommendations remains somewhat shrouded in mystery, although the company claims to aggregate and anonymize data from various apartment operators, combining it with public data and internal rent information to arrive at a suggested price point.

By relinquishing pricing decisions to algorithms, critics argue that RealPage’s clients are being nudged towards inflating rents beyond what human discretion might dictate. While apartment owners are armed with a plethora of market data and insights through the software, tenants find themselves at a disadvantage, often unaware of who truly holds the ownership reins behind a complex web of limited liability companies.

The lawsuits against RealPage delve deeper than just the issue of apartment rents; they challenge the fundamental dynamics of the rental market. The plaintiffs contend that without RealPage in the equation, the rental landscape would be more favorable to tenants, with landlords potentially showing greater restraint in rent hikes or being more responsive to market fluctuations. The crux of these cases revolves around establishing whether there was a concerted effort among apartment managers to collectively leverage RealPage to drive up rental prices or if they simply expected mutual benefits from using the software.

As the legal battles unfold, the RealPage cases underscore broader questions about the power dynamics within the real estate industry and the impact of technology on housing affordability. While the outcomes remain uncertain, one thing is clear—RealPage’s role in shaping rental prices has sparked a contentious debate that transcends mere profit margins and touches on the very essence of housing accessibility and fairness.