RealPage Sues Berkeley Over Ban on Algorithmic Rental Pricing

Town of Berkeley, California is being sued by RealPage over its ban on algorithms used to find out residence rental costs. The lawsuit states that Berkeley’s ordinance handed in March represents a “sweeping and unconstitutional ban on lawful speech,” and a violation of the First Modification’s prohibition on content-based restrictions.

RealPage is a controversial firm that has been likened to a cartel by some lawmakers throughout america. It basically gives landlords an algorithm that can maximize their revenue by evaluating a buyer’s properties together with rental information from close by properties to supply prompt pricing. Critics contend that the observe quantities to unlawful price-fixing. Final 12 months, the Division of Justice below former President Joe Biden filed a civil antitrust go well with towards RealPage, accusing it of reducing competitors amongst landlords by producing worth suggestions primarily based on rivals’ pricing data, whereas in a “free” market the homeowners must compete independently primarily based on pricing, lease phrases, and different components. Prosecutors say RealPage controls 80% of the marketplace for industrial income administration software program.

Information compiled by the Division of Justice confirmed how in sure areas the place RealPage software program was prevalent, rents have elevated at a better tempo than the nationwide common, although it’s laborious to quantify how a lot RealPage software program is liable for these will increase. In its lawsuit, nonetheless, the Justice Division cited RealPage executives’ personal phrases about how the product can maximize income: “There’s higher good in all people succeeding versus basically making an attempt to compete towards each other in a method that really retains your complete trade down.”

Proponents of the “abundance” or YIMBY actions have argued that deregulation of the housing market will result in decrease rental costs. Creating new properties in states like California is a sluggish, arduous course of, and new residence buildings are ceaselessly focused by NIMBY sorts who use environmental legal guidelines to try to thwart any improvement.

A typical chorus in MBA packages is that corporations shouldn’t take part in worth wars. RealPage’s feedback counsel it follows such logic, although the corporate is adamant that it doesn’t take part in unlawful collusion. It says that landlords settle for its strategies lower than 50% of the time, and the corporate believes Berkeley’s ban quantities to scapegoating. The actual difficulty, RealPage says, is a extreme lack of housing provide.

In a single occasion cited by the Justice Division, RealPage suggested a landlord may improve lease by 7% by reducing their occupancy charge from 97% to 95%. However in a market with excessive vacancies, RealPage would argue, landlords would nonetheless be certain by market forces to decrease lease with a purpose to hit that occupancy goal.

In Berkeley particularly, a report from the Housing Advisory Fee discovered that six main actual property companies named in lawsuits over RealPage’s software program personal over 1,300 flats within the metropolis. The ban on RealPage is about to enter impact on April 24, however RealPage is searching for a brief restraining order to dam it.

Whereas RealPage has leaned closely on First Modification arguments, quite a lot of actions that contain free speech are nonetheless unlawful. Conspiring to repair costs could contain free speech, however that doesn’t make regulating it unlawful.

Regardless of how this shakes out, landlords needs to be aware that they don’t seem to be held in excessive regard in america, and this software program just isn’t doing them any favors.