Report accuses software company RealPage of inflating rent in Triangle

RealPage, a software company that sets prices for significant shares of the rental market in Raleigh and Durham, is the subject of an antitrust investigation by the state attorney general.

In a new report, the Triangle chapter of the Democratic Socialists of America says it found evidence that RealPage is inflating local rent prices.

The report comes after Texas-based RealPage, whose software helps landlords set rental prices using a proprietary algorithm, came under national scrutiny over suspicions of illegal price fixing.

North Carolina Attorney General Josh Stein launched an antitrust investigation into the company in March, following in the footsteps of the attorneys general of the District of Columbia and Arizona. The U.S. Department of Justice is also preparing a lawsuit against RealPage, according to Politico.

In a July 8 press release, the DSA accused RealPage and its landlords of intentionally exacerbating and profiting from the region’s housing affordability crisis by artificially inflating rents in ZIP codes across the Triangle.

“In an effort to increase profits, property owners are widely using RealPage, which is threatening the safety and livelihoods of individuals and families across the region, threatening something many take for granted: a safe place to call home,” the press release reads.

The DSA report found that in Durham, the median RealPage listing rent was consistently higher than the overall median listing rent: $100 to $700 higher, depending on the ZIP code.

The report further found that RealPage has such dominance in local rental markets — setting rents for about 56 percent of units in Raleigh, 46 percent in Durham and a high share of rental inventory in surrounding cities — that the software effectively “raises prices for everyone.”

RealPage did not immediately respond to a request for comment.

In previous statements to ProPublica and Politico, the company has denied any wrongdoing and emphasized that RealPage’s rental price recommendations are simply recommendations that landlords can accept or reject. But ProPublica found that as many as 90 percent of the suggestions are accepted.

Stacey Anfindsen, a residential appraiser with Apex, is skeptical that RealPage could set prices on such a broad scale.

“There are so many alternative housing options in our market that I find it hard to believe a computer program can dictate rent,” Anfindsen wrote in an email.

Yet that’s exactly what a 2022 ProPublica investigation the firm conducted in other rental markets across the country found.

According to ProPublica, RealPage’s algorithm uses pricing data from more than 31,000 customers nationwide to recommend rents to landlords. Those rents are often higher than what property managers would charge on their own, the investigation found. The DSA report found evidence of a similar pattern in the Triangle.

Across the country, experts and regulators have raised alarms about RealPage’s use of competing landlords’ private data in its algorithm. They argue that sharing data among competitors to set higher rents would constitute illegal collusion. The Justice Department’s upcoming lawsuit against RealPage is expected to focus on that allegation, according to Politico.

Another element of the antitrust case against RealPage is the company’s dominance in some rental markets. For example, according to ProPublica, 70 percent of apartments in one Seattle neighborhood were managed by landlords who used RealPage in 2022. In those cases, renters have limited options beyond units priced by RealPage, which in many cases forces them to accept artificially higher rents.

According to the Triangle DSA chapter, 60 percent of occupied units in Carrboro are managed by a leasing agent who uses RealPage. That number is 63 percent for Holly Springs and a whopping 96 percent for Morrisville. In Greensboro, just 6 percent of occupied units are managed with RealPage. Most Triangle communities are in the 30 to 50 percent range.

The Triangle DSA report used data from the American Community Survey, an annual census survey that records housing statistics, and its own RealPage website. The full report is available here.

Contact reporter Chloe Courtney Bohl at [email protected]. Comment on this story at [email protected].

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