The U.S. Justice Department has filed a lawsuit against several landlords, accusing them of engaging in anti-competitive practices to keep rental prices high. The lawsuit alleges that the landlords used an algorithm to set rents and shared sensitive information with competitors to maximize profits.
This legal action comes at a time when many American renters are facing challenges in the housing market, with incomes not keeping pace with rising rental costs. Recent data indicates that a significant portion of renters are spending more than 30% of their income on rent and utilities, reaching an all-time high in 2022.
The impact of high rents is felt acutely by renters who are forced to make difficult decisions between essential expenses like medications, groceries, and rent. Eviction rates are also a concern, particularly affecting children, with 1.5 million evictions occurring annually, according to Princeton University's Eviction Lab.
While various factors contribute to the housing crisis, the Justice Department's lawsuit targets major landlords for their alleged role in maintaining high rents. The lawsuit names six landlords operating over 1.3 million units across 43 states and the District of Columbia.
One of the defendants, Greystar Real Estate Partners LLC, has denied engaging in anti-competitive practices and stated its commitment to conducting business with integrity. The lawsuit alleges that the landlords shared information on rents, occupancy rates, and pricing strategies with competitors, potentially influencing rental prices in the market.
The Justice Department's legal action aims to address the issue of high rents and promote housing affordability. The lawsuit also involves RealPage, a company that provides rental pricing recommendations to landlords through an algorithm. Prosecutors claim that the algorithm uses competitive data, enabling landlords to align their prices and avoid price competition.
RealPage has defended its software, stating that it is used in a minority of rental units in the U.S. and that its price recommendations are not always followed. The company argues that the root cause of high housing costs is the insufficient supply of housing, rather than the use of their software.
The lawsuit seeks to hold landlords and technology providers accountable for their practices and aims to make housing more affordable for millions of Americans struggling with high rental costs.
