The U.S. Justice Department is accusing six major landlords of colluding to maintain high rental prices across the country. The lawsuit alleges the landlords used an algorithm and shared sensitive information to manipulate the market and prioritize profits over affordability.
The U.S. Justice Department is suing six major landlords, collectively operating over 1.3 million units in 43 states and the District of Columbia, for allegedly conspiring to keep American rents high. The lawsuit, filed alongside 10 states including North Carolina, Tennessee, Colorado and California, alleges that these landlords used an algorithm to help set rents and privately shared sensitive information with competitors to boost profits.
This practice, according to the Justice Department, is designed to avoid lowering rents and contributes to the ongoing housing crisis. While the housing crisis has been attributed to various factors, including a decline in home construction over the past decade, the Justice Department's lawsuit highlights the role of major landlords in exacerbating the situation. The lawsuit accuses the landlords of exchanging sensitive data on rents and occupancy through emails, phone calls, and group chats. This information allegedly included renewal rates, acceptance of algorithm-recommended prices, use of concessions like offering one month free, and even their pricing strategies for the next quarter. The landlords named in the lawsuit include Greystar and Cushman and Wakefield, which collectively own at least 21 apartment complexes across Jacksonville, Florida. While Cortland Management LLC (Cortland) Florida is not a part of the lawsuit, residents in Jacksonville, like Reggie Willson, express little surprise at the allegations. They believe the actions of these landlords negatively impact individuals trying to secure affordable housing. Greystar Real Estate Partners LLC declined a request for comment from The Associated Press but issued an unsigned statement on its website denying any involvement in anti-competitive practices. They vow to vigorously defend themselves against these claims. The Justice Department revealed that one of the six landlords has agreed to cooperate with prosecutors, leading to a proposed settlement that would restrict their use of competitor data and algorithms for setting rents. The department emphasizes that this action aims to curb the practice of prioritizing profits over people and make housing more affordable for millions across the country. However, some legal experts, like Board Certified Real Estate Attorney Zach Roth, point out that the judgment offers no retroactive relief for renters. Landlords are essentially being asked to refrain from repeating these practices, but the harm already inflicted on those who paid inflated rents remains unaddressed. Jennifer Bowcock, RealPage’s senior vice president for communications, argues that their software, which recommends rental prices to landlords, is used on fewer than 10% of rental units in the U.S., and that their price recommendations are used less than half the time. She contends that scapegoating RealPage for housing affordability issues ignores the root cause: the undersupply of housing.
LANDLORDS HOUSING CRISIS DOJ RENTS COMPETITION ALGORITHM
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