New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.
Rental data firm RealPage has been hit with the second class action lawsuit in three months as a pair of renters in Florida alleged the company oversaw a “cartel” that unfairly drove up the cost of rent in markets across the Sunshine State.
The management practices between RealPage and its clients — some of the biggest apartment owners and managers in the country — led to some of the biggest jumps in rent prices in Miami, Orlando, Jacksonville and Tampa, according to the lawsuit.
The suit, like one filed in October, focuses on a rent pricing software RealPage created and agreements it has with property management firms to share rental data that helps them keep apartments full and at the highest price renters are willing to pay.
“RealPage and the property managers who use its revenue management services constitute a price-fixing cartel,” the suit alleges, “and the revenue growth they have achieved is possible only through coordinated price setting.”
The suit, which was filed Jan. 13, was first reported by the Miami New Times.
The lawsuit in October, which was filed in southern California, also said the price- and occupancy-sharing agreements amounted to a “cartel.”
The software in question was known as YieldStar, but has recently been changed to AI Revenue Management, according to the lawsuit.
The lawsuit was filed in Florida, which has seen some of the biggest spikes in rent over the past two years.
In March 2022, rent in Miami was 41 percent higher than it was a year earlier.
“Florida has been on top for quite a while,” Molly Boesel, principal economist for CoreLogic, said last month. “It doesn’t appear to have ended yet. You’ve got just really rapid growth in Miami.”
The suit names RealPage as the top defendant, along with more than a dozen companies that own and manage rental properties across the country.
The defendants said practices by RealPage and some of the world’s biggest property management companies amounted to “conspiracy to fix, raise, maintain, and stabilize rental housing prices” in Miami, Orlando, Jacksonville and Tampa.
RealPage didn’t immediately respond to a request for comment.
The defendants say the apartment market was more competitive before the introduction of YieldStar, saying apartment managers had to set prices independently at a rate the market was willing to pay. Widespread agreement between companies that own tens of thousands of units across the nation are “anticompetitive,” the defendants said.
“With the assurance that their competitors are respectively setting Miami, Orlando, Jacksonville, and Tampa rental prices using the same algorithm, each Defendant property manager could allow a larger share of their units to remain vacant while maintaining higher rental prices across their properties,” the suit said. “This increased their revenue at the expense of renters.”
The pair of lawsuits comes after an investigative report by the investigative journalism outlet ProPublica, which detailed the inner workings of YieldStar.
Within weeks of the October report, RealPage and property managers were facing the class action lawsuit and calls by members of Congress for the Department of Justice to investigate the company.
In response to the October lawsuit, RealPage said the ProPublica original report “contains inaccuracies and is misleading.”
“Rent prices are determined by various factors including supply and demand as well as each property owner’s unique circumstances,” the company said in a statement. “There is a housing supply shortage and that alone drives prices higher. Occupancy has been at an all-time high.”
The company said its software was built to be legally compliant.
“RealPage is aware of the lawsuit,” the statement continued. “We strongly deny the allegations and will vigorously defend against the lawsuit. Beyond that, we do not comment on pending litigation.”
Get Inman’s Property Portfolio Newsletter delivered right to your inbox. A weekly roundup of news that real estate investors need to stay on top, delivered every Tuesday. Click here to subscribe.
