One Texas company is helping to raise rents across the country
A North Texas company has been helping to drive the spike in rent prices across the country.
Driving the news: A new ProPublica report chronicles how RealPage's YieldStar software helps landlords set prices for apartments across the U.S.
Why it matters: Legal experts wonder whether the Richardson-based company has created a new kind of cartel allowing the nation's largest landlords to indirectly fix rent prices, potentially in violation of federal law.
- A company representative told ProPublica that RealPage "uses aggregated market data from a variety of sources in a legally compliant manner."
How it works: For years, RealPage has sold software that uses data analytics to suggest daily prices for open units. Property managers have gushed about how the company's algorithm boosts profits.
- RealPage discourages bargaining with renters and recommends that landlords sometimes accept lower occupancy rates in order to raise rents and make more money.
- One of the algorithm's developers told ProPublica that leasing agents had "too much empathy" compared to computer generated pricing.
Context: RealPage became the nation's biggest provider of rent-setting software in 2017 after federal regulators approved a controversial merger with its biggest rival, Lease Rent Options, the ProPublica investigation found.
- The company now has more than 30,000 customers.
By the numbers: Greystar, the nation's largest property management firm, found that even in one downturn, its buildings using YieldStar outperformed their markets by 4.8%, according to the report.
- Though the North Texas real estate market is dipping, rents continue to soar — up 13.5% over last year.
What they're saying: "The beauty of YieldStar is that it pushes you to go places that you wouldn't have gone if you weren't using it," Kortney Balas, director of revenue management at JVM Realty, says in a testimonial video on the company's website.
Go deeper: Read the whole ProPublica story to get a sense of how RealPage impacts renters across the country.
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