RealPage algorithm accused of artificially increasing rents, stifling competition

An algorithm called YieldStar is responsible for artificially driving up prices and stifling competition across the US, according to a ProPublica investigation.

The investigation found that approximately 90% of the 31,000+ property managers/landlords who use YieldStar obey its price increase suggestions. Many landlords do not negotiate with their tenants - something discouraged by RealPage - and thereby sacrifice their relationships and trust with them.

ProPublica also alleged that RealPage's software may be facilitating collusion amongst its clients, particularly in locations where many of them use YieldStar to set rent prices.

• The article prompted three senators and seventeen members of congress (pdf) to request the US Department of Justice (DoJ) to investigate RealPage, a move repeated (pdf) in March 2023. Media reports indicate the DoJ opened an investigation late November 2022.

• Nine renters also filed (pdf) a lawsuit in San Diego accusing RealPage of forming 'a cartel to artificially inflate the price of and artificially decrease the supply and output of multifamily residential real estate leases from competitive levels.'

• In October 2023, the District of Colombia sued (pdf) RealPage and 14 landlords for illegally colluding 'to artificially raise rents by participating in a centralized, anticompetitive scheme, causing District residents to pay millions of dollars above fair market prices.'

Transparency

RealPage acknowledges that YieldStar recommends a price for every available unit every day, determining the rate by drawing on private competitor data on the actual rent tenants paid, as opposed to the publicly advertised rent. 

However, the company has not reveal its inner workings, or opened its algorithm to third-party inspection or assessment.