Minnesota Senator Amy Klobuchar along with other Senate Democrats are calling for an investigation into the real estate monopoly guided by RealPage, a software used by some landlords to set monthly rent prices for apartments.
Klobuchar, chair of the Senate Subcommittee on Competition Policy, Antitrust and Consumer Rights, authored a letter addressed to the Department of Justice’s Assistant Attorney General for Antitrust. She’s calling for an investigation into RealPage’s potential anticompetitive practices in inflating rent prices using an algorithm fueled by private data collected from the company’s real estate clients. The letter was also signed by Senator Richard Durbin of Illinois and Senator Cory Booker of New Jersey.
“We are concerned that the use of this rate setting software essentially amounts to a cartel to artificially inflate rental rates in multifamily residential buildings,” reads the letter. “The conduct in these markets raises significant anticompetitive concerns. We are aware that the Division has taken an aggressive posture in assessing and investigating potential anticompetitive conduct, including considering how algorithms could facilitate collusion in novel ways.”
ProPublica revealed RealPage’s invisible hand in an article published last month. RealPage’s software is called YieldStar and its algorithm uses data the company collects from clients, which can include competitor prices, in order to suggest a recommended rent for landlords to charge their tenants. RealPage has since acquired a heavy portion of the real estate market—ProPublica found that in one Seattle neighborhood, 10 property owners oversaw 70% of apartments and all 10 used RealPage’s software. The outlet’s investigation found that rent was typically stable or barely raised in apartments that were not managed with RealPage software.
The problem here is evident: Tenants are no longer able to negotiate a final rent price with landlords as the many set prices based on RealPage. While property values and rents are bound to naturally increase in the real estate market, RealPage executive Andrew Bowen claimed at a conference last year that RealPage was driving the price hikes, as quoted in ProPublica’s piece.
It’s not an easy time to be a renter, especially in the bounce back from reduced rents during the height of the covid-19 pandemic. A New York Times report found that Jersey City, New Jersey—located across the river from one of the U.S.’s busiest metropolitan areas—had the highest national rent price with an average cost of $5,500. Likewise, CNN reported earlier this year that the national median rent jumped up 17% to $1,792 in February 2022.
Renters are seemingly trapped in a never ending cycle. As rents rise meteorically, many tenants are not able to save enough money to invest in their own real estate equity and are forced to keep renting at sky-high prices.