Final week, the Division of Justice added six giant landlords to an ongoing antitrust lawsuit, alleging that they used software program to illegally repair rents by sharing pricing data amongst opponents. The property administration firms collectively management 1.3 million items throughout america, and two of them—Greystar and Cushman & Wakefield—have sizable holdings right here in Seattle.
Landlords that use software program like RealPage’s YieldStar to set rents management at the least a 3rd of all condo buildings in Seattle with greater than 10 items. Their marketing campaign donations helped set up a landlord-friendly mayor and construct the town council majority that delayed the vote on funding social housing and hopes to roll again renter protections.
Greystar is the biggest condo proprietor in america, and in accordance with an evaluation of rental registration information, it owns or manages at the least 15,000 items in Seattle. Cushman & Wakefield controls practically 1,500 items throughout the town, plus a lot of workplace buildings. It presumably manages extra items via its subsidiary Pinnacle Property Administration, the third-largest property administration firm within the nation, which was additionally added to the go well with. Seattle-born actual property baron and prolific marketing campaign donor John Goodman based Pinnacle, however Cushman & Wakefield acquired it in 2020.
Throughout current elections, Greystar and Cushman & Wakefield solely gave a modest quantity to the same old suspects—Mayor Bruce Harrell and Council President Sara Nelson—however different RealPage customers had been extra beneficiant. Lately photographed with Harrell breaking floor on a brand new growth on the former web site of the Pink Elephant Automobile Wash, executives at Holland Companion Group—a RealPage person that controls 2,400 items—dumped practically $12,000 into the mayor’s marketing campaign, maxed out donations to Chamber-picked council candidates, and unfold out $20,000 amongst varied neighborhood committees.
Whereas its focus is nationwide, the Justice Division lawsuit is rooted in a sequence of sophistication motion lawsuits filed in Seattle in 2022. Greystar and Cushman & Wakefield had been each defendants in one of many earliest fits by a College of Washington pupil named Gabriel Navarro, who accused landlords of ruining the extremely aggressive pupil housing market by outsourcing pricing and provide selections to RealPage.
Every week later, the identical legislation agency filed one other go well with, containing extra damning proof from confidential witnesses. One former Greystar worker stated he would get an inventory of costs from RealPage and name the corporate’s opponents instantly for up to date data: “It was price-fixing. What else are you able to name it once you’re actually calling your competitors and altering your price primarily based on what they are saying?”
RealPage additionally collects pricing information via surveys and incentivizes opponents to share nonpublic, competitively delicate data via non-public boards and person teams. In these boards, landlords discourage concessions to renters, like a free month’s hire or different reductions. On the identical time, this data sharing eliminates uncertainty, enabling them to boost costs to the best stage the market will bear.
The six firms named within the federal antitrust go well with are solely the tip of a a lot bigger iceberg. By researching nationwide price-fixing lawsuits towards RealPage, the Washington Submit recognized at the least 52 firms that use the software program. Companies that use RealPage or a competing product by Yardi Programs management practically 52,000 items in Seattle that we are able to determine.
One lawsuit claims that RealPage customers management 60 p.c of condo housing in Downtown Seattle, Capitol Hill, Central District, South Lake Union, and Queen Anne. By utilizing the algorithm, landlords can drive up rents throughout all condo sizes. For instance, the common RealPage-managed two-bedroom condo in Central Seattle rents for practically $600 extra. For 3 bedrooms, the distinction is $2,500.
At present, 34 lawsuits have been filed towards RealPage—half of them in Seattle—although a lot of the private class motion fits had been consolidated into one case within the Center District of Tennessee. Nonetheless, the way forward for the Justice Division’s case appears unsure, with an actual property developer set to take over the White Home.
In the meantime, some giant cities like San Francisco and Philadelphia have restricted or banned rent-setting algorithms, and extra are contemplating it. Nonetheless, Seattle is unlikely to comply with go well with anytime quickly, given the stranglehold actual property cash has on native politics. A lot of RealPage’s buyer base offers to The Washington Multi-Household Housing Affiliation PAC, which has amassed nearly half one million {dollars} for lobbying. Neighborhood committees, fattened up by landlord {dollars}, performed a pivotal position within the final metropolis council elections, operating assault adverts towards progressives that helped construct the present business-friendly majority.
With out intervention from the courts or native political motion,, it’s uncertain that we’ll ever construct our approach out of this housing disaster with non-public growth alone. In keeping with the Washington Submit, 70 p.c of housing constructed since 2020 is developed by RealPage customers. What’s extra, one of many promoting factors of the software program is that landlords don’t want to keep up excessive occupancy to generate income. It’s helped property managers notice they’ll generate increased income with a big emptiness price simply by elevating rents in unison with opponents. Excluding 2020, emptiness charges at the moment are at their highest in a decade, but rents proceed to rise.