North Carolina joins antitrust lawsuit against real estate software company

This story was first published by Greg Childress, NC Newsline
August 23, 2024

North Carolina Attorney General Josh Stein on Friday announced that he has joined an antitrust lawsuit filed by the U.S. Department of Justice alleging that the real estate software company RealPage violated antitrust law and artificially increased rent prices for tenants in North Carolina and across the country.

The lawsuit was filed in the U.S. District Court for the Middle District of North Carolina. Attorneys general in California, Connecticut, Colorado, Minnesota, Oregon, Tennessee and Washington also joined the lawsuit.

“Few things are as important as our homes — but too many North Carolinians struggle to afford their apartment,” Stein said during an afternoon press conference. “Rents are already too high. I will not tolerate any company scheming to block healthy competition among landlords. It raises rents and it’s illegal.”

Citing N.C. Housing Coalition data, Stein said that between 2018 and 2023, rents increased by 55 percent in Durham-Chapel Hill, 52 percent in Raleigh and 51 percent in Charlotte.

“Rising rents creates real financial and emotional strain,” Stein said. “Folks are worried about how to make ends meet. They’re worried that they don’t have enough money for retirement or an emergency and they’re worried that if their landlord increases their rent again, they may not be able to afford their home any longer.”

At the heart of the lawsuit is revenue management software RealPage sells to landlords across the country. The Justice Department alleges that landlords are sharing the information produced by the software to set rent prices higher than what they would be in a competitive market.

In exchange for buying and using the company’s YieldStar software, property managers share detailed, nonpublic, competitively sensitive data with RealPage that includes information about units coming on the market, the rent they are charging and discounts, according to a new release Stein’s office provided.

RealPage, according to the news release, uses the nonpublic information to suggest a price that property managers should charge for their apartments to make more money. When clients accept RealPage’s recommendations, prices for comparable apartments become artificially inflated and renters can’t find better deals for shopping around, the press release said.

A spokesperson for RealPage told The New York Times that the software was “purposely built to be legally compliant.”

RealPage has a large footprint in North Carolina, Stein told reporters.

“Three of the top 10 markets that this company operates in are Charlotte, Raleigh and Durham-Chapel Hill, so we’re in the most concentrated markets in which they operate,” Stein said.

Stein, the Democratic nominee for governor, was joined by Wake County Commission Chairwoman Shinica Thomas and Monica Burks, policy counsel at the Center for Responsible Lending.

“Anti-competitive practices inflate housing costs,” Burks said. “They make it difficult for a renter to compare rates and get a fair offer on an apartment unit and it exacerbates the crisis of simply being housed.”

Burks said low-income renters are hit hardest by such practices, and can fall victim to predatory lenders.

“They [predatory lenders] know that at the end of each month that there is a shortfall between what they [low-income renters] are bringing home and the expenses that the need to cover and they fill this gap with unconscionable loans that are not sustainable.”

Thomas noted that median rent jumped 40 percent in Wake County between 2010 and 2020.

“That cost families an extra $4,200 a year,” Thomas said. “For a household that’s struggling to make ends meet, that can be the difference between stability and eviction.”

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