The software company RealPage, which sets prices for large shares of the rental market in Raleigh and Durham, is the subject 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, whose software helps landlords set rental prices using a proprietary algorithm, is already under scrutiny nationwide for alleged illegal price fixing.
North Carolina Attorney General Josh Stein opened an antitrust investigation into the company in March, following in the footsteps of the District of Columbia and Arizona attorneys general. The U.S. 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 worsening and profiting off of the area’s housing affordability crisis by artificially inflating rents in zip codes across the Triangle.
“In their effort to increase profits, landlords’ widespread use of RealPage endangers the safety and livelihood of individuals and families across the region by threatening something many take for granted: a safe place to call home,” the press release reads.
In Durham, the DSA report found that the RealPage median asking rent was consistently higher than the overall median asking rent: between $100 and $700 higher, depending on the zipcode.
The report further alleges that RealPage is so dominant in local rental markets—setting rents for about 56 percent of units in Raleigh, 46 percent in Durham, and high shares of the rental stock in surrounding towns—that the software is effectively “raising prices for everyone.”
RealPage did not immediately respond to a request for comment.
In past statements to ProPublica and Politico, the company denied any wrongdoing and emphasized that RealPage’s rental pricing recommendations are just that: recommendations, which landlords can take or leave. However, ProPublica found that as many as 90 percent of the suggestions are adopted.
Stacey Anfindsen, a residential real estate appraiser based in Apex, is skeptical of the idea that RealPage could be fixing prices in such a widespread way.
“Our market has so many apartment alternatives, I find it difficult to believe that a software program can dictate rent,” Anfindsen wrote in an email.
Yet that’s exactly what a 2022 ProPublica investigation found the company was doing in other rental markets around the country.
According to ProPublica, RealPage’s algorithm uses pricing data from its 31,000-plus clients nationwide to make recommendations to landlords about what rents to charge. Those rents are often higher than what property managers would charge on their own, the investigation found. The DSA report found evidence of a similar pattern in the Triangle.
Nationwide, experts and regulators have sounded alarms over RealPage’s use of competing landlords’ private data in its algorithm. They say that sharing data between competitors in order to set higher rents would amount to illegal collusion. The upcoming DOJ lawsuit against RealPage is expected to focus on this allegation, according to Politico.
Another component of the antitrust argument against RealPage hinges on the company’s dominance in certain rental markets. For instance, according to ProPublica, 70 percent of apartments in one Seattle neighborhood were managed by landlords who used RealPage in 2022. In cases like this one, renters have limited choices beyond units priced by RealPage, forcing them in many cases to accept artificially higher rents.
According to the Triangle DSA chapter, 60 percent of the occupied units in Carrboro are managed by a leasing agent who uses 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 using RealPage. Most Triangle municipalities fall in the 30 to 50 percent range.
The Triangle DSA report used data from the American Community Survey, an annual census survey that records housing statistics, and from RealPage’s own website. The full report is available here.
Reach Reporter Chloe Courtney Bohl at chloe@indyweek.com. Comment on this story at backtalk@indyweek.com.
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