Landlords' expensive software drives up cost for Richmond renters
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Richmond renters likely shelled extra bucks spent last year because of pricing algorithms used by landlords.
- That's according to an analysis from the White House Council of Economic Advisers first shared with Axios' Emily Peck.
Why it matters: The report puts some hard numbers to accusations that have piled up against RealPage, a company that makes software that helps big landlords and property managers set prices.
- In August, the Department of Justice filed an antitrust suit against the company, alleging its pricing algorithm allows landlords to collectively push rents higher.
The big picture: Nationwide, the software cost renters an extra $3.8 billion last year, per the CEA.
What they're saying: "We are disappointed The White House CEA never contacted RealPage about their report, which is riddled with flawed assumptions," company spokeswoman Jennifer Bowcock said in a detailed statement Wednesday.
- "Their conclusions are based on the erroneous assumption that all property managers are setting coordinated rents, but that is not how RealPage's revenue management software (RMS) works."
- Earlier this month, the company filed a motion seeking to dismiss the DOJs claims in the antitrust suit, arguing that the agency hasn't shown any real anticompetitive effects of its product.
Zoom in: On average, landlords that used the software added around $70 a month to renters' costs.
- At least two property management companies that used RealPage — Cushman and Wakefield and Greystar — manage or managed multiple apartment complexes in the area, per an Axios review of their listings.
- The companies' involvement with RealPage was reported by Times-Dispatch and ProPublica.
How it works: For their analysis, the researchers modeled the price difference between two scenarios using a range of publicly available data.
- In one scenario, landlords used RealPage software to set prices. In another, they set prices individually.
Reality check: Even if these algorithms were pushing up rents, as the CEA suggests, they wouldn't be the driving force behind rising housing prices.
- Instead, a long-term shortage of affordable housing is the main culprit, as the CEA itself notes.
Between the lines: It's unclear whether the incoming Trump administration will want to pursue the suit against RealPage.
- The analysis appears to be the Biden administration's last push to draw attention to the issue.
Editor's Note: This story has been updated with a detailed response from RealPage.