What's Happening?
Greystar, the largest landlord in the United States, has agreed to a $7 million settlement with nine states following allegations that its use of rent-setting algorithms contributed to increased housing
costs. The settlement, filed in a North Carolina federal court, is part of a broader series of antitrust lawsuits targeting RealPage and similar software companies. These lawsuits claim that such software enables property managers to illegally align prices, thereby driving up rents. As part of the settlement, Greystar will cease using software that relies on confidential data from other landlords to set rents. This follows a separate $50 million settlement last month over similar allegations and a nonmonetary agreement with the Department of Justice in August to halt these practices. Greystar manages over 946,000 units nationwide, and RealPage's software is reportedly used on fewer than 10% of U.S. rental units.
Why It's Important?
The settlement is significant as it addresses the growing concern over housing affordability in the United States. By targeting rent-setting algorithms, the lawsuit highlights the impact of technology on housing prices and the potential for software to facilitate price collusion among landlords. This case underscores the importance of regulatory oversight in the housing market, particularly as technology becomes more integrated into pricing strategies. The settlement may lead to increased scrutiny of similar practices and encourage other states to enact legislation against rent-setting software. It also reflects a broader trend of legal actions aimed at ensuring fair pricing in the housing sector, which could have long-term implications for landlords and tenants alike.
What's Next?
The settlement requires judicial approval before it can be finalized. Meanwhile, states like California and New York have already enacted laws to curb the use of rent-setting software, and cities such as Philadelphia and Seattle have passed ordinances against these practices. The outcome of this case may influence further legislative actions across the country. RealPage, which denies wrongdoing, argues that the real issue is the lack of housing supply, suggesting that its software often recommends lowering rents to maintain high occupancy. The ongoing debate over the role of technology in rent pricing is likely to continue, with potential implications for housing policy and market dynamics.
