An alleged rent price-fixing scheme may have affected some Clark County tenants’ rents but likely has had no impact on the larger market, experts say.
Several lawsuits — including one by the U.S. Department of Justice, Washington and seven other states — have been filed against RealPage, a Texas-based company providing property management software.
RealPage has algorithm software (AI Revenue Management, Yieldstar and LRO) that collects property data from its landlord clients and uses it to suggest rental prices on a daily basis. The lawsuits allege the algorithm encourages landlords to advertise higher rents based on other landlords’ sensitive, nonpublic data rather than the market.
Essentially, rather than undercutting a competitor to attract a tenant, the lawsuits allege the software compels landlords to work together to keep rents high. RealPage makes it difficult to decline its suggested high prices, resulting in 85 percent of clients keeping their rent within 5 percent of the recommendations, the justice department’s joint lawsuit alleges.
An estimated 800,000 leases in Washington have been priced using RealPage revenue management software since 2017, according to an August news release from the Washington Attorney General’s Office after joining the justice department’s lawsuit.
RealPage said in a June 18 statement that “attacks on the industry’s use of revenue management are based on demonstrably false information” and its software benefits providers and residents.
Clark County
Some lawsuits, such as one by two Seattle tenants, name individual companies, as well as RealPage, as defendants. The complaints depict tight clusters of buildings owned by companies allegedly using RealPage to support the argument that they form a regional monopoly where tenants have no choice but to accept prices.
In January, The Washington Post released a map of all properties in the United States owned by companies named in price-fixing lawsuits. Zooming in on the Portland metro area shows about 200 loosely distributed buildings, 44 of them in Clark County. The buildings make up somewhere between 10 percent and 20 percent of the market, according to the map.
It’s possible the tenants in those buildings experienced rent increases if a price-fixing software was used, said Mike Wilkerson, an expert in real estate economics and director of analytics at the Portland-based consulting firm ECONorthwest.
Although Clark County’s fair market rent has more than doubled over the past decade, the alleged price-fixing isn’t to blame, Wilkerson said. The number of buildings on the map is too low to affect prices on a larger scale, he said.
“Some relatively small portion of the market isn’t enough to basically collude and get to a point of monopoly, or near-monopoly-like conditions,” he said. “Consumers still are able to compare and look at various choices for rent.”
Future concerns
Lawsuits and news reporting on the issue have ignited concern about the alleged price-fixing scheme across the nation. Wilkerson said he often receives questions about how it might have impacted the market.
Some places, such as the Washougal apartment complex called Lookout at the Ridge, have signs on their websites that say, “NO YIELDSTAR BY REALPAGE.”
Despite a recent rise in fears of price-fixing, Wilkerson said landlords in Clark County and beyond have always used information about other rental properties in the area for pricing.
“Prior to these tools, every property manager had access to, through any number of companies nationwide … rent data at properties in their market,” Wilkerson said.
Use of this kind of software could grow in Clark County if the lawsuits against RealPage fail, said Terry Wollam, a broker at Wollam and Associates in Clark County.
“We’re in the midst of a transition of being made up of smaller business owners and … upsizing to larger, wealthier, more sophisticated ownership groups,” Wollam said.
Those rental property owners are more likely to use software like the one provided by RealPage, he said, than mom-and-pop landlords that make up a dwindling share of the market.
“It is curious to me how that will play out,” Wollam said.
