A bunch of US senators, together with Elizabeth Warren and Bernie Sanders, have despatched a letter to the Division of Justice urging an investigation of the position RealPage’s Yieldstar algorithm performs in setting rents.
In a letter to Assistant Lawyer Basic Jonathan Kantor, the senators stated “institutional buyers and rent-setting algorithms” have been inflating housing costs, the Dallas Morning Information reported.
“The rise of institutional buyers and rent-setting algorithms have weakened competitors within the already strained housing market, leading to substandard companies and unnecessarily excessive housing prices for American households,” the letter said.
The senators stated “the widespread use of anonymized and aggregated proprietary rental information by the nation’s largest landlords may lead to defacto price-setting by these firms, driving up costs and hurting renters.”
“Given these findings, the DOJ ought to carefully evaluation rent-setting algorithms like YieldStar to find out if they’re having anti-competitive results on native housing markets which have seen elevated institutional investor exercise,” the letter concluded.
RealPage didn’t reply to a request for remark.
The DOJ’s Antitrust Division began a probe of RealPage final 12 months, after non-profit ProPublica printed the outcomes of an investigation which stated the Richardson, TX-based firm’s income administration proptech enabled a few of the largest property administration companies to illegally share information and act as a “cartel” artificially inflating rents in violation of federal regulation.
ProPublica’s expose was the premise for 2 federal class motion lawsuits, one filed by condominium renters in Washington and California and the opposite by a College of Washington pupil alleging collusion on pupil housing rents.
In line with RealPage’s web site, YieldStar software program combines lease transaction information from greater than 13.5M models and makes use of AI-driven algorithms to “unlock a whole bunch of foundation factors of hidden yield by worth optimization.”
The corporate claims its algorithms allow new customers to realize “as much as 400% in year-one ROI” for homeowners, operators and buyers.
ProPublica’s article quotes RealPage execs boasting at a CRE convention that the corporate’s information analytic instrument, used to recommend each day costs for open condominium models, has been driving double-digit hire will increase throughout the nation.
ProPublica stated RealPage’s 2017 acquisition of The Rainmaker Group’s Lease Hire Possibility enterprise had successfully given the Texas agency a monopoly on predictive analytics used to set hire costs, increasing RealPage’s consumer base to 31,700 clients.
“The ProPublica article comprises inaccuracies and is deceptive. RealPage fully disagrees with its conclusions,” RealPage stated, in a press release supplied to GlobeSt after the primary class motion lawsuit was filed.
“We strongly deny the allegations and can vigorously defend towards the lawsuit,” the proptech agency stated.
“The ProPublica article repeatedly takes info out of context and ignores key information to craft a distorted image of how income administration software program works,” RealPage informed GlobeSt.
“The article prominently states that ‘RealPage discourages bargaining with renters’ whereas ignoring the large purpose why many housing suppliers desire bottom-line pricing,” RealPage stated.
“Negotiating hire opens up the potential for offering totally different renters with totally different pricing for a similar housing unit, which may put housing suppliers squarely in violation of federal Honest Housing legal guidelines. Honest housing compliance is without doubt one of the the explanation why income administration software program exists,” the proptech agency stated.
“RealPage’s income administration software program is purposely constructed to be legally compliant,” the corporate’s assertion stated. “It focuses on the interior provide and demand dynamics at a specific property and doesn’t think about or have any visibility into availability (provide) at competing properties.”
RealPage’s assertion famous that “income administration is often used throughout many industries, and improvements on this space have been to the mutual advantage of each shoppers and distributors.”
“RealPage’s software program is however one among plenty of such instruments out there within the market to property operators throughout the US,” the corporate stated.
