RealPage, the software company responsible for setting prices for much of the rental market in Raleigh and Durham, is the target of an antitrust investigation by the state attorney general.
In a new report, the Triangle chapter of the Democratic Socialists of America says it has found evidence that RealPage is inflating local rent prices.
The report comes as Texas-based RealPage, which offers software that uses proprietary algorithms to help landlords set rental prices, is already under investigation nationwide for alleged illegal price fixing.
North Carolina Attorney General Josh Stein opened an antitrust investigation into the company in March, following the attorneys general of the District of Columbia and Arizona. The US Department of Justice is also preparing a lawsuit against RealPage, according to Politico.
In a July 8 press release, the DSA chapter accused RealPage and the landlords who use it of intentionally exacerbating and profiting from skyrocketing home prices in the region by artificially inflating rents in ZIP codes throughout the Triangle.
“The widespread use of RealPage by landlords seeking to increase their profits threatens what many take for granted – a safe place to call home – and puts the safety and livelihoods of individuals and families across our community at risk,” the press release read.
In Durham, the DSA report found that RealPage average asking rents were consistently higher than the overall average asking rent, ranging from $100 to $700 higher depending on the zip code.
The report further alleges that RealPage has such a strong hold on local rental markets, setting the rents for approximately 56 percent of properties in Raleigh, 46 percent in Durham, and many of the rental properties in surrounding cities, that the software is effectively “pricing everyone up.”
RealPage did not immediately respond to a request for comment.
In previous statements to ProPublica and Politico, the company denied any wrongdoing and stressed that RealPage’s rental price recommendations are just that, recommendations that landlords are free to adopt or not, but ProPublica found that 90 percent of the suggestions are adopted.
Stacey Anfinsen, an Apex-based residential real estate appraiser, is skeptical of the idea that RealPage is fixing prices over such a wide range.
“There are so many apartment options in our market that I find it hard to believe that a software program can determine rent,” Anfinsen said in an email.
But a 2022 ProPublica investigation found that the company was doing exactly that in other rental markets across the country.
According to ProPublica, RealPage’s algorithms use pricing data from more than 31,000 clients nationwide to recommend rents to charge landlords. The study found that those rents are often higher than what property management companies would charge on their own. The DSA report found a similar pattern in the Triangle.
Nationwide, experts and regulators have sounded the alarm over RealPage’s use of competing landlords’ personal data in its algorithms. They say the sharing of data between competitors to charge higher rents constitutes illegal collusion. The upcoming Department of Justice lawsuit against RealPage is expected to focus on this allegation, according to Politico.
Another element of the antitrust argument against RealPage hinges on the company’s dominance in certain rental markets: For example, according to ProPublica, 70% of apartments in one Seattle neighborhood were managed by landlords using RealPage in 2022. In these cases, renters have limited options outside of units priced by RealPage, and are often forced to accept artificially inflated rents.
According to the Triangle DSA chapter, 60 percent of residential units in Carrboro are managed by leasing agents who use RealPage. The figure is 63 percent in Holly Springs and a whopping 96 percent in Morrisville. In Greensboro, just 6 percent of residential units are managed using RealPage. Most municipalities in the Triangle fall in the 30 to 50 percent range.
The Triangle DSA report used data from the American Community Survey, an annual census that records housing statistics, and the RealPage website. The full report can be found here.
Contact reporter Chloe Courtney Ball at chloe@indyweek.com. To comment on this story, send an email to backtalk@indyweek.com.
