Four plaintiffs have brought a class action complaint against RealPage, Inc. and a number of landowners who use RealPage’s software for antitrust collusion. They allege that RealPage’s software, which takes in private rental data from its users and then provides rent prices to the property managers, is anti-competitive price-fixing.
As has been previously covered by Law Street, RealPage is a software company who provides numerous services for property management companies, including marketing, housing portals, renter payment platforms, accounting, and market survey data. At issue in this case is software they acquired in 2o02, called YieldStar, which mines private data from RealPage’s customers and public data from other properties to calculate an optimum rent that its customers should charge for a given apartment or house.
Per the complaint, since then, RealPage has grown considerably through attracting new customers and acquiring competitors. As their market share has grown, YieldStar has become more efficient at setting leasing rates across a given market. Furthermore, property owners and managers who use this software are required to use the algorithm-generated lease price at least 80% of the time, and they must submit a justification for deviating from said price.
The complaint argues that prior to YieldStar and related software, landowners would set prices with a mindset to minimize vacancy. When occupancy dropped, rent rates would drop so that properties could fill up again. When vacancy was low, rents would increase to match demand. Without active knowledge of competitor actions, these owners had to react to price drops, since an owner who reduced their prices could quickly gain market share.
However, with the introduction of YieldStar, these same owners could keep prices high even during periods of high vacancy, since their competitors were setting their prices in tandem. As one manager cited in the complaint put it, “[W]e are all technically competitors . . . [but RealPage] helps us work together . . . to work with a community in pricing strategies, not to work separately.”
This case concerns the Dallas, Austin, and Houston metro-area rental home markets, where, according to the complaints, rents have steadily risen even as occupancy has decreased. Since property managers do not have to worry about being undercut by competitors, they, through YieldStar, can collude to keep prices high and increase profits while housing fewer people.
To stop this alleged collusion, the plaintiffs, who rented apartments in Texas, are filing a class-action suit seeking recompense for artificially inflated rents and an end to the alleged collusion. They feel YieldStar constitutes a Sherman Act and Texas Free Enterprise and Antitrust Act of 1983 violations under their respective per se rules.
Their proposed class includes all individuals who rented apartments in the Dallas, Austin, and Houston metro areas that were managed by companies using YieldStar or other AI rent-setting software.