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alexis-kenyon--kgnu--she-her-_1_08-28-2024_094240 and zach-neumann_1_08-28-2024_094240 and 2 others Alexis Kenyon
Interview transcript:
Alexis Kenyon: So, how does RealPage work? How do landlords use it to fix prices?
Zach Neumann: Yeah, I mean, it’s actually quite simple. If you’re a landlord controlling a lot of units, say, in a multifamily property, you input a lot of data about your operations: what your rents are, how many people are reaching out, how many are renewing, and other commercial data about the rental market at your building. Other landlords in your area do the same thing.
RealPage then takes all of that data, combines it, and makes recommendations to you and other landlords regarding how much you should charge, what a proper vacancy rate might look like, and what renewals should entail. Instead of landlords competing with one another for tenants—like saying, “Hey, I’ve got lower prices” or “I’ve got better amenities, come to my building”—they’re using RealPage to coordinate prices and supply. This allows them to keep prices higher than they would be in a purely competitive market.
Alexis Kenyon: I think everyone knows that even if they don’t rent, the price of rent has skyrocketed in recent years, especially in places like Denver and Boulder, and even nationally. We attribute this rise to various factors, but this seems like a new piece to the puzzle. I’m curious, how big of a difference is the software making? Is it having a major impact on people’s rents?
Zach Neumann: Yeah, if 80% of the units—or 60%, pick a big number—are owned by investors in Denver, and they’re all feeding their information into the same program, which tells them what to charge, and they all charge that price, then rents are going to go up. People need housing; it’s not a product you can simply opt out of. If you don’t own a home and you’re a renter, you have to rent. This allows landlords to distort the market.
Instead of the market fostering competition, landlords can extract a tremendous amount of wealth from the community. The amount of money being transferred from Coloradans and Americans to a small number of investors is mind-boggling.
Alexis Kenyon: I read that the lawsuit is targeting six huge companies, each owning at least 6,000 units in Denver. How widespread is this? Are landlords all over the state using this software?
Zach Neumann: From talking to our clients—and we represent a lot of people across the state—it seems that if you’re living in a big multifamily property owned by a large corporate landlord or an investor, the odds are high that RealPage or similar algorithmic software is setting your rent prices.
Alexis Kenyon: How did this become a problem? When did landlords start using RealPage?
Zach Neumann: RealPage has been around for a few years. But the bigger issue is that this is another step in the private equity takeover of housing in America. You used to see more individual investors and owners in the housing space, and there wasn’t this kind of coordination. Now, in markets like Denver, four or five large out-of-state companies control a significant number of the available apartments.
On top of that, they’re using the same software to set prices. When people can’t pay these high rents, landlords take them to eviction court, leading to displacement and homelessness. Rental prices are out of control, and landlords use the threat of eviction to enforce these prices. People will keep paying because housing is a fundamental need.
Alexis Kenyon: You mentioned that some tenants have gone on RealPage and watched as the software suggests higher rent for them. Can you share any stories of tenants experiencing landlords using this software to raise rents?
Zach Neumann: Yes, I have a client who has lived in the same apartment building and tracked his lease renewals year over year. Initially, he saw increases of 1%, 2%, maybe 3%—in line with inflation. But over the past few years, since his landlord started using RealPage, he’s seen increases of 12%, 15%, 18%. He attributes this to the landlord using RealPage, and indeed, many landlords across Denver have started using these algorithmic pricing programs.
It raises serious questions when you see such dramatic rent increases, which led this renter to discover that RealPage was being used.
Alexis Kenyon: Do you think some landlords might not understand that what the software is doing amounts to price-fixing, which is illegal?
Zach Neumann: That could be part of it. Not all landlords are using this—it’s primarily the larger, multifamily landlords, the investor class. But there are market effects. If 60% or 80% of landlords use this software, those who don’t may look at rental listings and think, “I guess that’s the market price,” and set their rents accordingly. They aren’t engaged in direct collusion, but they’re following market trends shaped by this software.
The problem with technology like RealPage is that it pulls everyone along, driving prices up across the board. This creates a challenging market for tenants and gives landlords a significant advantage. We’re seeing record eviction filings, and there’s a direct link between high housing costs and these filings.
Alexis Kenyon: What role is the legal system playing in all this? Are there efforts to combat the negative effects of these pricing practices?
Zach Neumann: The Attorney General and Department of Justice are stepping in to address this, aiming to prevent families from being priced out and evicted. They’re filing lawsuits against companies like RealPage for anti-competitive practices. There’s a lot of gratitude and optimism about the lawsuit’s potential outcome. We hope it will lead to more equitable housing practices and provide some relief to renters struggling with these high costs.
