Throughout the U.S., working people are being hit by outrageous rents that eat up disproportionate amounts of families’ household income. Residential rents have increased at least 20% nationwide since 2020, with more than half of working people paying over 30% of their income just to have a roof over their head. And, as bosses press against pay raises, the squeeze gets harder and harder each year.
To maximize their profits, big corporate landlords are now determining their rent charges through computer-generated algorithms. They increasingly rely on RealPage, a Texas-based firm whose software dominates 80% of the U.S. market for rent gougers. It sets prices for about 3 million rental units nationwide.
The algorithm works by amassing rent and apartment data from across the country — using computing power to swipe its information from sources both private and public — to come up with recommended rents for vacancies and yearly increases for workers with expiring leases. It never concludes that rents should be reduced, only increased. Landlords pay for their “labor” to get exactly these kinds of results.
In some metropolitan areas, the use of rent-fixing software algorithms has resulted in double-digit rent raises. When ProPublica reporters looked into RealPage in 2022, Andrew Bowen, then a company executive, boasted, “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.”
Landlords who contract with RealPage are so pleased with its self-serving recommendations, they follow them about 90% of the time, the American Economic Liberties Project reports.
Rent-setting algorithms have also led to higher rates of evictions, and more working people having to move out of their apartments as rents are set higher and higher.
As news about this operation has become more well-known, the federal government, joined by eight state attorneys general — from North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington state — filed a lawsuit in August against RealPage. The complaint claims that RealPage accesses data on over 16 million of the 23 million apartment units in the U.S. The case, however, is only against RealPage, not the landlords who follow this company’s “advice” and live off your rent.
“Ill-informed legislation seeking to ban the responsible use of nonpublic price data will not lower rent prices,” RealPage spokeswoman Jennifer Bowcock insisted to the Wall Street Journal.
Jacking up rents through ‘junk fees’
Another way landlords have been jacking up rents is through use of hidden “junk fees,” which tenants aren’t told about until they move in. John Hall, a high school teacher, and Monica Bahena, who works in a medical office, rented a one-bedroom apartment in College Park, Maryland. They found the place on Zillow, advertised at $1,729 a month, a place they liked but could barely afford. They decided to give it a go.
When they began moving in, they were told that there were a few additional mandatory monthly “fees,” including $150 for a “technology package” and “front door trash pickup,” and a one-time $450 “community fee.”
Eight months later, the couple joined a class-action lawsuit against the building’s owner, Houston-based Camden Development, one of the country’s largest apartment developers and landlords. “You get in, you apply, and then all of a sudden there are all of these fees,” Hall told the Washington Post.
After months of struggling to cover the rent, Hall and Bahena finally broke the lease, moved out of the building and also out of the state.