This Texas company could be contributing to rising rent in Denver
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If your rent is suddenly sky high, an algorithm could be to blame.
Driving the news: A North Texas-based company is contributing to rising rents in cities across the country, including metro Denver, a new ProPublica investigation reveals.
- RealPage's proprietary YieldStar software has helped some of the nation's largest landlords set steep prices for properties nationwide using an algorithm that takes into account specific apartment features, like floor plans, the report says.
Why it matters: The investigation is catching the attention of some local leaders, and raising questions among legal experts nationwide about whether the company could be colluding with landlords to indirectly fix rent prices — potentially violating federal law.
What they're saying: RealPage "does not facilitate anticompetitive conduct" and can't "move markets up or down," a company representative told Axios Denver.
- The company "can only recommend rental prices within the range that the economic forces of supply and demand at a particular property allow."
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 to raise rents and make more money.
- One of the algorithm's developers told ProPublica that leasing agents had "too much empathy" — unlike computer-generated pricing.
State of play: Rent in Denver continues to rise, making the metro one of the country's most expensive for apartment hunters.
- As of September, rent for a one-bedroom apartment in the area averaged about $1,500 — up 5% from last September and 7% since the start of this year, according to an analysis from Apartment List, a real estate search engine.
The intrigue: Greystar, the nation's largest property management firm — which oversees more than 130 Front Range apartment buildings — found that even during an economic downturn, its buildings using YieldStar outperformed their markets by 4.8%, according to ProPublica's report.
The big picture: 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.
Go deeper: Read the full ProPublica report to get a sense of how RealPage impacts renters across the country.