RealPage Inc., headquartered outside Dallas, Texas, collects a vast trove of local housing market data from landlords, such as rents, occupancy rates, lease expiration dates, square footage and amenities offered to tenants; combines it; and feeds all of that into an algorithm, according to the suit, filed July 2 in U.S. District Court in Covington.
Using the algorithm, RealPage sells its clients pricing “recommendations” that result in steady rent hikes and an end to tenant-friendly amenities, such as waived fees or a free month’s rent, according to the suit. By its own estimate, RealPage controls at least 80% of this product market, according to the suit.
Because many supposedly competing landlords use the same RealPage software, the algorithm — not the free market — sets rents around the country, including Kentucky, where 340,000 tenants live in multifamily housing, the suit alleges.
“Widespread adoption of defendant RealPage’s RMS (Revenue Management Systems software) has caused rent to increase explosively in recent years. Rents for multifamily units in the Lexington-Fayette market have experienced significant year-over-year increases since 2020 and outpaced the wider southern region in 2023,” Assistant Attorney General John Ghaelian wrote.
An attached chart showed average rent increases spiking as high as 15% in Lexington in May 2022.
“RealPage’s stated goals and value proposition are not a secret. Its executives are blunt: They want landlords to ‘avoid the race to the bottom in down markets,’” Ghaelian added, quoting from the firm’s promotional materials.
“Sometimes RealPage is even more direct, acknowledging that its software is aimed at ‘driving every possible opportunity to increase price’ or observing that, among landlords, ‘there is a greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.’”
“That is not how the free market works,” Ghaelian wrote. ”A free market requires that landlords compete on the merits, not coordinate pricing. Landlords should win renters by offering whatever combination of price and quality they think is most attractive.”
ANTITRUST VIOLATIONS ALLEGED
The suit alleges violations of the Sherman Antitrust Act, the Clayton Antitrust Act and the Kentucky Consumer Protection Act. It seeks an end to the defendants’ alleged behavior, forfeit of any ill-gotten gains and unspecified damages, which could include up to $10,000 in penalties for each violation of the Consumer Protection Act.
RealPage did not respond to Herald-Leader requests for comment last week.
The real-estate companies named as defendants in the suit are BH Management Services LLC, First Communities Management Inc., Greystar Real Estate Partners LLC, Highmark Residential LLC, Independence Realty Trust Inc., Mid-America Apartments LP, Mid-America Communities Inc., RPM Living LLC and Willow Bridge Property Company LLC.
These companies did not respond to requests for comment, other than BH Management Services, which declined to comment.
At least five of those companies — Greystar Real Estate Partners, Highmark Residential, Independence Realty Trust, Mid-America Apartments and Mid-America Communities — own apartment complexes around Lexington, according to the suit.
The state of Kentucky’s complaint against RealPage follows a similar antitrust suit filed against the company last August by former President Joe Biden’s Department of Justice, which was joined by the states of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. That suit is pending, although RealPage filed a motion to dismiss it on June 27.
There also is a separate class-action lawsuit pending against RealPage and 34 rental property managers in federal district court in Tennessee, combining 21 different cases filed around the country.
BANS IN PLACE, PROPOSED
Several major cities have started banning the use of RealPage, including San Francisco, Philadelphia and Minneapolis, citing the damage its software does to affordable rental housing, said Kentucky state Rep. Nima Kulkarni, D-Louisville.
Kulkarni filed a bill in last winter’s General Assembly that would have banned the use of “algorithmic devices in setting the amount of rent to be charged to a residential tenant” in Kentucky. But it never received a committee hearing in the House.
The lawmaker, who praised Coleman’s office for pursuing a lawsuit, said she will propose another ban on RealPage software next session.
“This is something that people are unaware of, the fact that this exists, the fact that the impact of it is felt but not necessarily seen,” Kulkarni said. “Essentially it boils down to price-fixing, because instead of competing with each other, landlords can basically just see what is the highest rate they can possibly charge, and so there is no free market anymore in this situation.”
Young Kentuckians getting charged $2,000 a month for a small apartment can’t save enough to buy a home, so they never escape the clutches of the predatory rental market, she added.
“Of course, they have no way of appealing it because this is not a person,” she said. “This is not a landlord you can talk to and say, ‘Why are you increasing my rent? What’s the justification?’ It’s an algorithm, and so there’s no way to change it or fight against it.
“And for landlords, it gives them the benefit of saying, ‘Oh, well, we’re not doing anything wrong. It’s just what this tool is telling us,” she said.
Kentucky lawmakers have grappled with a statewide shortage of housing, and especially affordable housing, for the last few years.
A task force of lawmakers studied the housing shortfall during the legislative interim in 2024. They concluded the state was 206,207 housing units short of what it needs for its population of more than 4.5 million people, making shelter unaffordable and weakening the economy.
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