ATLANTA — More than any other city in the United States, Atlanta has the most rental properties impacted by price adjustment algorithms operated by RealPage.
That’s according to a recent report from the White House, which shared data about how the company’s algorithm hurts competition and renters, as a result.
In August, the U.S. Department of Justice filed a lawsuit against RealPage, accusing it of harming millions of American renters through the use of its algorithm-based price adjustment “scheme.”
“RealPage’s egregious, anticompetitive conduct allows landlords to undermine fair pricing and limit housing options while stifling necessary competition,” Acting Associate Attorney General Benjamin C. Mizer said when the lawsuit was announced. “The Department remains committed to rooting out illegal schemes and practices aimed at empowering corporate interests at the expense of consumers.”
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However, the White House said their own analysis was made independently of the USDOJ lawsuit, using publicly available data.
The report, published Tuesday, said that while the main problem causing high housing costs is a lack of housing supply, a lack of competition further increases costs.
“Households are harmed when competition in rental housing is weakened,” the White House said. “We find that anticompetitive pricing costs renters in algorithm-utilizing buildings an average of $70 a month.”
For Atlanta renters, that impacts nearly 75% of units available to residents, according to data analysis by the federal government, putting Georgia’s capital at the top of the list for how many units had rental prices affected by RealPage’s algorithm in 2023.
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Nationally, the White House said RealPage’s software products are used in at least 10% of rental properties.
“We find that coordinated rents from algorithmic pricing cost renters in algorithm-utilizing units $70 a month, or 4% of rent, on average nationally,” the White House report says.
But in Atlanta, that dollar count was an average of $181 instead, nearly $50 higher than the next ranked city, Denver, Colo.
When it comes to rental costs and how it impacts Americans, housing prices are easily visible as an overall cost driver through the Bureau of Labor Statistics’ monthly Consumer Price Index.
In the CPI, the cost of shelter has remained the largest single driver of inflation in the United States month-after-month, even when other sectors see decreases or adjustments.
While the national CPI is now 2.7%, showing price changes from November 2023 to November 2024, the cost of housing in the same time span was 4.7%.
More specifically, rental costs were up 4.4% year-over-year in November. Month-by-month, prices rose 0.2%, when seasonally adjusted.
According to real estate company ApartmentList, Atlanta was the 43rd most expensive city in the U.S. to rent in at the start of December.
In a statement shared with Channel 2 Action News, said the analysis from the White House is “flaw-filled,” with a statement from RealPage SVP of Communications Jennifer Bowcock saying:
“We are disappointed The White House CEA never contacted RealPage about their report, which is riddled with flawed assumptions. They claim to have access to RealPage’s data, and they do not. Their conclusions are based on the erroneous assumption that all property managers are setting coordinated rents, but that is not how RealPage’s revenue management software (RMS) works. The software’s recommendations are highly customized to each individual property’s own strategy, circumstances, and data, and do not in any way depend on recommendations made to other properties.
RealPage’s RMS is purposely designed to be legally compliant, and despite the false allegations to the contrary, our customers have always had complete discretion to accept or reject their bespoke pricing recommendations. RealPage’s RMS does not fix prices, and the report does not provide any evidence to support that assumption. Even DOJ has admitted that customers reject the pricing recommendations more than half the time, on average, and that LRO and AIRM/YieldStar are different revenue management software and should not be treated as the same.
Further, the report’s market penetration analysis is wrong from the start because it does not consider competition from smaller rental properties. Renters do not consider only properties with 5 or more units when they look for housing options. The CEA does not have RealPage’s data and looks to the Calder-Wang and Kim paper, which, among other problems and limitations, acknowledges that the authors “do not have access to the underlying algorithms used” and “therefore, our findings cannot be used to assess the legality” of RealPage RMS. It’s past time to stop scapegoating RealPage for housing affordability problems when, as the report admits, the “root cause of high housing costs is the under-supply of housing,” which we have been saying from the beginning.”
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