Washington State Attorney General Bob Ferguson has filed an antitrust lawsuit, in collaboration with a bipartisan group of eight attorneys general and the federal Department of Justice, alleging that the software company RealPage conspired with landlords to artificially inflate rental prices across Washington state. The lawsuit claims that RealPage’s practices helped landlords coordinate rent increases, leading to higher costs for tenants.
The lawsuit alleges that RealPage facilitated the sharing of nonpublic, competitively sensitive data among competing landlords through its software, which helped these landlords raise rents and maximize profits. According to the lawsuit, approximately 800,000 leases in Washington have been priced using RealPage’s revenue management software since 2017. One potential RealPage client described the company’s business model as “classic price fixing,” underscoring concerns about the software’s role in manipulating rental markets.
RealPage is also accused of organizing “user group” meetings where competing landlords exchange competitive information and discuss pricing strategies. In one instance, a RealPage vice president allegedly stated, “There is a greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the industry down,” suggesting that the software encourages collaboration over competition.
The lawsuit further claims that RealPage’s software encourages landlords to raise rents even when there are numerous vacant units on the market, leading to artificially inflated rental prices. This practice is particularly concerning in Washington, where housing costs are among the highest in the nation. “RealPage colluded to fix prices and keep rents rising in order to boost profits,” Ferguson stated. “The cost of housing is putting a strain on too many working families. My legal team and I will stand up to this collusion and fight for affordable rents for Washingtonians.”
Filed in the U.S. District Court for the Middle District of North Carolina, the lawsuit alleges that RealPage violated the federal Sherman Antitrust Act. The suit asserts that RealPage used nonpublic data collected from landlords to fuel 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 suggest maintaining or raising rents even when market conditions, such as declining occupancy rates, would typically lead to lower rents.
According to the Attorney General’s Office, RealPage’s most recent product, AI Revenue Management (AIRM), uses artificial intelligence to assist landlords in setting rental prices. The lawsuit claims that RealPage planned to replace its older software, Yieldstar and LRO, with AIRM, further solidifying its position as the leading revenue management software provider for U.S. landlords.
The lawsuit underscores the impact of these alleged practices on Washington’s rental market, where housing costs are already steep. 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 home. The report indicates that a typical Washington working family needs to earn about $40 per hour, or over $83,000 annually, to afford such housing without spending more than 30% of their income on rent. However, the average renter in Washington makes only $29 per hour, highlighting the disparity.
Further supporting the claims, data from The Washington Post shows significant rent increases in Washington state 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 Skagit, Benton, and Spokane counties saw rent hikes exceeding 30%. Chelan County experienced the highest increase, with rents rising by 41%. Nationally, rents increased by about 19% during the same period.
The lawsuit also points to broader national trends, citing that by 2021, around 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, this number had grown to 12.1 million. The percentage of income spent on rent by non-college graduates has also risen sharply, from 30% in 2000 to 42% in 2017. Even college graduates, who typically spend a lower percentage of their income on rent, saw an increase from 24% in 2021 to over a third in 2022.
Ferguson’s investigation into RealPage began in January 2023 following a ProPublica report that suggested RealPage’s algorithm might be contributing to rising rents nationwide. The investigation found that RealPage allegedly gathers nonpublic, competitively sensitive data from its users to feed its revenue management software algorithms. Landlords using RealPage software reportedly agree to share their data, which is then combined with information from other landlords to generate rental pricing recommendations that often push rents higher.
In feedback provided to RealPage, one prospective client reportedly said, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing.” The lawsuit alleges that RealPage’s software creates pricing recommendations that do not fall below a set minimum, even in soft markets, while allowing prices to exceed a maximum threshold when conditions allow.
The complaint also claims that RealPage discourages rent negotiations and concessions. For instance, RealPage’s training allegedly advises new clients to set their software to automatically accept its pricing recommendations. When clients opt out of this auto-accept feature, RealPage advisors reportedly attempt to persuade them to turn it on. Additionally, the software is said to require property managers to provide explanations whenever they reject its pricing suggestions, with these decisions potentially being escalated to property owners.
Moreover, the lawsuit claims that RealPage’s software encourages landlords to keep rents high even when vacancy rates are up. It allegedly advises adjusting lease durations, such as offering 13-month leases instead of 12 months, to avoid a glut of units becoming available simultaneously, which could drive prices down due to increased supply.
Attorney General Ferguson’s lawsuit seeks to halt RealPage’s alleged anticompetitive practices and stop both RealPage and landlords from exchanging sensitive, nonpublic competitive information to align rental pricing.
