A Denver resident filed a class action lawsuit last week alleging that more than a dozen property management companies conspired to fix apartment rental prices across the greater metro area.
Jeffrey Weaver, a Denver renter since 2017, filed the federal lawsuit Wednesday against RealPage, a software company that suggests rental prices for property management companies. The software relies on an algorithm that collects private data about occupancy, leases and “virtually every other possible data point that drives rent” across all RealPage clients — companies that are competing against each other in the market, according to the lawsuit.
That shared information between competitors drives RealPage’s suggested prices and amounts to market-wide price fixing, the lawsuit alleges. The 17 property management companies named as defendants in the lawsuit alongside RealPage control more than 44,000 apartments in the Denver area, according to the complaint, which calls the group a “price-fixing cartel.”
“A recent analysis conducted by ProPublica showed that rents in areas where RealPage clients control a high percentage of rental units have increased at a significantly higher rate than those where the company’s influence is weaker,” the lawsuit says. “Specifically, within the Greater Denver Metro Area, both rents and vacancy rates had been trending higher from 2015-2020, demonstrating that the forces of supply and demand no longer control the price of rent in the Greater Denver Metro Area.”
RealPage spokeswoman Teresa Wolke said in an emailed statement that the company denies the price-fixing allegations.
“RealPage strongly denies the allegations and will vigorously defend against the lawsuit,” the statement said. “Beyond that, we do not comment on pending litigation.”
In the past, individual management companies sought to keep occupancy rates high and turnover low. A particular company might lower rents in order to fill apartments — and that lower price would force competitors to also drop their rents, the lawsuit says. But RealPage’s system essentially allows competing property management companies to keep their rents high because all competing companies conform to the same price suggestions, no matter what occupancy each building sees, the lawsuit alleges.
RealPage instructs its clients to follow its price suggestions at least 80% to 90% of the time, and companies must justify any deviations from the algorithm’s set rents, according to the lawsuit.
Weaver’s attorney, Rusty Glenn, did not immediately return a request for comment Monday.
“By enforcing price discipline and setting rents that result in lower occupancy rates, Defendant RealPage provides assurances that all property managers using its software are
doing the same thing — raising rents and accepting lower occupancy instead of lowering the price to fill units,” the lawsuit says. “In this way, RealPage enables property managers to overcome the prisoner’s dilemma that prevented coordinated pricing in the historical market for residential rental apartments.”
The software also helps competing management companies coordinate when their leases start and end, the lawsuit alleges, a practice aimed at preventing periods of over- and undersupply of available apartments due to seasonal shifts.
In the last month, the company has also been sued for similar allegations of price-fixing in Seattle, North Carolina and Florida, court records show.