Software company RealPage, which sets prices for large parts of the rental market in Raleigh and Durham, is the subject of an antimonopoly investigation by the state attorney general.
In a new report, the Triangle chapter of the Democratic Socialists of America finds evidence that RealPage is driving up local rents.
The report comes as Texas-based RealPage, whose software helps landlords set rents using a patented algorithm, is already under fire nationwide for alleged illegal price-fixing.
North Carolina Attorney General Josh Stein opened an antitrust investigation into the company in March, following the lead of the attorneys general for the District of Columbia and Arizona. The U.S. Department of Justice is also preparing a lawsuit against RealPage, Politico reported.
In a July 8 press release, the DSA chapter accused RealPage and the landlords who use it of intentionally exacerbating the area’s affordable housing crisis and profiting from it by artificially raising rents in Triangle zip codes.
“In their effort to increase profits, the widespread use of RealPage by landlords jeopardizes the safety and livelihood of individuals and families in the region by threatening something many take for granted: a safe place to call home,” the press release said.
In Durham, the DSA report found that RealPage’s median rent was consistently higher than the overall median rent — between $100 and $700 higher, depending on the zip code.
The report goes on to allege that RealPage is so dominant in local rental markets — setting rents for about 56 percent of homes in Raleigh, 46 percent in Durham, and large shares of the rental stock in surrounding cities — that the software effectively “raises prices for everyone.”
RealPage did not immediately respond to a request for comment.
In previous statements to ProPublica and Politico, the company denied any wrongdoing and insisted that RealPage’s rent recommendations are just that: recommendations that landlords can take or leave. However, ProPublica found that a whopping 90 percent of the suggestions are adopted.
Stacey Anfindsen, a residential real estate appraiser at Apex, is skeptical that RealPage is engaging in price fixing on such a large scale.
“Our market has so many alternatives to apartments, I find it hard to believe that a software program can determine rent,” Anfindsen wrote in an email.
Yet that’s exactly what a 2022 ProPublica investigation found the company was doing in other rental markets across the country.
According to ProPublica, RealPage’s algorithm uses pricing data from its 31,000+ clients nationwide to make recommendations to landlords on what rents to charge. Those rents are often higher than what property managers would charge themselves, the study found. The DSA report found evidence of a similar pattern in the Triangle.
Nationally, experts and regulators have raised alarms about RealPage’s use of private data from competing landlords in its algorithm. They say that data sharing between competitors to set higher rents amounts to illegal collusion. The Justice Department’s upcoming lawsuit against RealPage is expected to focus on this allegation, according to Politico.
Another part of the antitrust argument against RealPage revolves around the company’s dominance in certain rental markets. For example, 70 percent of apartments in one Seattle neighborhood were managed by landlords using RealPage in 2022, according to ProPublica. In cases like these, tenants have limited choices outside of RealPage-priced units, in many cases forcing them to accept artificially higher rents.
According to the Triangle DSA chapter, 60 percent of occupied units in Carrboro are managed by a leasing agent using RealPage. That figure is 63 percent for Holly Springs and a whopping 96 percent for Morrisville. In Greensboro, only 6 percent of occupied units are managed with RealPage. Most Triangle communities 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 from RealPage’s own website. The full report is available here.
Reach reporter Chloe Courtney Bohl at [email protected]. Respond to this story at [email protected].