Washington State Attorney General Bob Ferguson, working with a bipartisan group of eight state attorneys general and the federal Department of Justice, has filed an antitrust lawsuit alleging that software company RealPage conspired with landlords to artificially inflate rent prices across Washington State. The lawsuit alleges that RealPage’s practices helped landlords coordinate rent increases, resulting in higher costs for tenants.
The lawsuit alleges that RealPage used its software to facilitate the sharing of nonpublic, competitively sensitive data between rival landlords, helping those landlords increase rents and maximize their profits. According to the lawsuit, approximately 800,000 leases in Washington have been settled using RealPage’s revenue management software since 2017. One potential RealPage customer described the company’s business model as “classic price fixing,” underscoring concerns about the software’s role in manipulating rental markets.
RealPage has also been accused of organizing “user group” meetings where rival landlords share competitive information and discuss pricing strategies. In one case, a RealPage vice president is said to have stated, “It’s better for everyone to be successful than for us to try to essentially compete against each other in a way that drives the industry down,” implying that the software encourages collaboration rather than competition.
The lawsuit further alleges that RealPage’s software encourages landlords to raise rents even when there are plenty of vacant units on the market, resulting in artificially inflated rental prices. This practice is particularly concerning in Washington, where housing costs are among the highest in the country. “RealPage has conspired to fix prices and keep rents rising to increase profits,” Ferguson said. “Housing costs are a burden on too many working families. My legal team and I will oppose this collusion and fight for affordable rents for Washingtonians.”
The lawsuit was filed in the U.S. District Court for the Middle District of North Carolina and alleges that RealPage violated the federal Sherman Antitrust Act. The lawsuit alleges that RealPage used nonpublic landlord data to power an algorithm that generated coordinated pricing recommendations allegedly designed to reduce competition and increase profits. The software products mentioned in the lawsuit, including AI Revenue Management (AIRM), Yieldstar, and Lease Rent Options (LRO), reportedly recommend maintaining or increasing rents even when market conditions such as declining occupancy rates would normally result in lower rents.
According to the Attorney General’s Office, RealPage’s latest product, AI Revenue Management (AIRM), uses artificial intelligence to help landlords set rent prices. The lawsuit alleges that RealPage planned to replace its older software, Yieldstar and LRO, with AIRM, further cementing its position as the leading provider of revenue management software for U.S. landlords.
The lawsuit highlights the impact of these alleged practices on Washington’s rental market, where housing costs are already very high. A report by the National Low Income Housing Coalition found that Washington has the fifth-highest “housing wage” in the United States – the hourly wage required to afford rent on a two-bedroom apartment. The report shows that a typical Washington working-class family must earn about $40 an hour, or over $83,000 a year, to afford such an apartment without spending more than 30 percent of their income on rent. However, the average renter in Washington makes just $29 an hour, highlighting the inequality.
Data from the Washington Post further supports these claims, showing that rents in Washington state have increased significantly over the past five years, outpacing the national average. Rents in Pierce, Snohomish, Whatcom, Walla Walla and Thurston counties have increased by more than 25% since 2019, while rents in Skagit, Benton and Spokane counties have increased by over 30%. The highest increase was in Chelan County, with rents increasing by 41%. Nationally, rents increased by about 19% over the same period.
The lawsuit also points to broader national trends, citing that by 2021, roughly 10.4 million U.S. households spent more than half of their income on rent, up from about 9.4 million in 2019. By 2022, that number had grown to 12.1 million. The share of income spent on rent by non-college graduates has also risen sharply, from 30% in 2000 to 42% in 2017. Even among college graduates, who typically spend a smaller percentage of their income on rent, there was an increase, from 24% in 2021 to over a third in 2022.
Ferguson’s investigation into RealPage began in January 2023 following a report by ProPublica that suggested RealPage’s algorithm may be contributing to rising rents across the country. The investigation found that RealPage allegedly collects nonpublic, competitively sensitive data from its users to feed the algorithms of its revenue management software. Landlords who use RealPage’s software reportedly agree to share their data, which is then combined with information from other landlords to generate rental price recommendations that often drive up rents.
In feedback to RealPage, a prospective customer reportedly said, “I’ve always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and terms. This is classic price fixing.” The lawsuit alleges that RealPage’s software creates price recommendations that do not fall below a set minimum, even in weak markets, while allowing prices to exceed a maximum when conditions allow.
The complaint also alleges that RealPage does not encourage rent negotiations and concessions. For example, RealPage’s training allegedly advises new customers to set their software to automatically accept price suggestions. When customers turn off this automatic acceptance feature, RealPage consultants allegedly try to convince them to turn it back on. In addition, the software allegedly requires explanations from property managers when they reject price suggestions, with those decisions potentially being passed on to the property owners.
In addition, the lawsuit alleges that RealPage’s software encourages landlords to keep rents high even when vacancy rates are high. It allegedly advises adjusting lease terms, such as offering 13-month contracts instead of 12-month contracts, to avoid an oversupply of apartments becoming available at the same time, which could drive prices down due to increased supply.
With his lawsuit, Attorney General Ferguson seeks to stop RealPage’s alleged anti-competitive practices and prevent both RealPage and landlords from exchanging confidential, nonpublic competitive information in order to adjust rental prices.
