A Harvard University study reported that nearly a quarter of Black renters were behind on rent last year. According to a new lawsuit, a rent-setting website that purported to helping apartment seekers is contributing to this racial housing gap.
Last month, ProPublica reported that renters filed a lawsuit alleging that a software company named RealPage was working with nine of the nation’s biggest property managers “formed a cartel to artificially inflate rents in violation of federal law.”
The landlords reportedly named in the suit are Greystar, Lincoln Property Company, Equity Residential, Mid-America Apartment Communities and FPI Management — the managers of hundreds of thousands of properties.
RealPage’s algorithm pushes data each night to suggest daily prices for available rental units and uses private data on what nearby competitors are charging in rents. According to ProPublica, the software factors in actual rents paid to competitors — not just what they are advertising.
ProPublica pointed out that in Seattle, WA 70% of more than 9,000 apartments were regulated by just 10 property managers, all RealPage customers.
“RealPage’s revenue management solutions prioritize a property’s own internal supply/demand dynamics over external factors such as competitors’ rents,” a company statement said per ProPublica, “and therefore help eliminate the risk of collusion that could occur with manual pricing.”
The issue is a part of a larger conversation around a rental crisis, particularly among minorities. Another property price setting company Zillow released an analysis that found renters of color are disproportionately more likely than non-minority renters to pay an application fee, even when researchers controlled for age, income and other factors.
“I think there’s no getting away from the possibility that some of this disparate impact originates from prejudice or suspicion or a greater sense of risk from certain types of renters who don’t look like them,” said Jeff Tucker, an economist with Zillow as reported by Mercury News.