Houston/ Real Estate & Development
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Published on September 13, 2024
Class-Action Lawsuit Accuses Richardson-Based RealPage and Landlords of Price-Fixing in Houston's Rent SurgeSource: Google Street View

On the issue of rising rents in Houston, a class-action lawsuit is targeting landlords and a Richardson-based software company RealPage. The plaintiffs in the lawsuit, which spans from Tennessee to Texas, allege that RealPage's algorithmic software facilitated a price-fixing scheme that drove up rental rates. Accusations suggest the algorithm contributed to the 22% surge in Houston's average apartment rents since 2020. RealPage firmly denies involvement in rent-settings, attributing market conditions to the heightened prices, as reported by the Houston Chronicle.

Maureen Tkacik, investigative editor at the American Prospect, painted a grave picture of the situation to the Texas Standard, implicating YieldStar, a RealPage product, in high-pressure tactics leading landlords to adhere to rent recommendations that often exceed market rates. As per her assertions, which she said in a statement obtained by Texas Standard, the algorithm acts more like a cartel, removing units from the market and consequently driving up rents across cities like Dallas and Atlanta, where RealPage has a significant market share.

The situation has elicited a string of pending lawsuits and a criminal inquiry by the Department of Justice into YieldStar's pricing practices. Texas Housers' research director Ben Martin voiced concern, suggesting that the advice given through RealPage software may be enabling landlords to extract higher rents, pushing the limits of affordability even further. Phoenix renters at properties employing RealPage’s services found themselves overcharged by an estimated 12% to 13% according to an analysis referenced by the Arizona state attorney general's lawsuit filed earlier in 2024. This collusion among landlords, as Nikolas Guggenberger from the University of Houston outlined, is seen as a modern twist on historic anti-competitive practices.

Despite this looming legal quagmire, landlords using RealPage's algorithm, such as Camden Property Trust and Greystar Management, remain tight-lipped or categorically deny any breach of antitrust laws. RealPage's spokesperson Jennifer Bowcock defended the company's position, stating to the Houston Chronicle, "We believe the claims brought by DOJ are devoid of merit and will do nothing to make housing more affordable. We intend to vigorously defend ourselves against these accusations." At the same time, the San Francisco Board of Supervisors enacted a ban on the use of algorithms that analyze and share non-public rental data, signaling an emerging regulatory backlash. In the face of increasing scrutiny, algorithms stand at the intersection of technological innovation and potential regulatory infractions, with the outcomes of these numerous legal challenges still pending.

Houston-Real Estate & Development