Greystar, the nation’s largest landlord, has reached a $7 million settlement with nine states — including Colorado — that sued the property management giant for using rent-setting algorithms that officials have blamed for driving up housing costs.
The proposed settlement, filed Tuesday in a North Carolina federal court, is the latest to result from antitrust lawsuits targeting RealPage and similar software companies. Prosecutors argue the products help rival property managers illegally align prices and push up rents. A judge must still approve the deal.
“Whether it’s through smoke-filled backroom deals or through an algorithm on your computer screen, colluding to drive up prices is illegal,” Democratic California Attorney General Rob Bonta said in a news release. “Families across the country are staring down an affordability crisis. Companies that intentionally fuel this unaffordability by raising prices to line their own pockets can be sure I will use the full force of my office to hold them accountable.”
As part of the settlement, Greystar will no longer use software that relies on other landlords’ confidential data to set rents. Greystar also agreed separately last month to pay $50 million to settle a class-action lawsuit over its use of RealPage. And in August, the company reached a separate nonmonetary deal with the Department of Justice to halt similar practices.
“We are pleased this matter is resolved and remain focused on serving our residents and clients,” Greystar said in a statement Wednesday.
Based in South Carolina, Greystar manages more than 946,000 units nationwide, according to the National Multifamily Housing Council. RealPage, which is based in Texas, has said its software is used on fewer than 10% of rental units in the U.S., and that its price recommendations are used less than half the time. It did not have a comment on the latest settlement.
RealPage has denied any wrongdoing and argues that the plaintiffs misunderstand how their product works. It argues that the real driver of high rents is a lack of housing supply, and says its pricing recommendations often encourage landlords to drop rents since they are incentivized to maximize revenue by maintaining high occupancy.
The RealPage software provides daily recommendations to help landlords and their employees price their available apartments. The landlords do not have to follow the suggestions, but critics argue that because the software has access to a vast trove of confidential data, it helps RealPage’s clients charge the highest possible rent.
The governors of California and New York signed laws last month to crack down on rent-setting software, and a growing list of cities, including Philadelphia and Seattle, have passed ordinances against the practice.
The states that are part of the settlement include California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon and Tennessee.
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