Landlords with ties to Silicon Valley have been targeted by the U.S. Justice Department in its growing effort to to stop property owners from using tech software to influence rent prices.
Federal officials on Tuesday added six corporate landlords to an existing lawsuit against RealPage, a company accused of providing property management software used to maximize rent prices. The six landlords are Greystar Real Estate Partners, Blackstone’s LivCor, Camden Property Trust, Cushman & Wakefield and Pinnacle Property Management Services, Willow Bridge Property Company and Cortland Management. Because the software tools contain private data and are unaffordable to smaller landlords, the justice department claims corporate landlords are illegally scheming with software providers to crush their competition — resulting in higher costs for tenants.
The prospect has been enough to motivate San Jose Councilmembers Peter Ortiz and David Cohen to propose banning the use of algorithmic tools to set rent prices in the city. RealPage touts to landlords on its website that the company “delivers data-driven AI machine learning insights for balancing supply and demand at your property and provides recommendations that optimize performance.”
“Many of the named entities in the justice department’s lawsuit are big players in the San Jose rental market,” Ortiz told San José Spotlight. “By taking them on, the justice department is standing up for San Jose renters who are increasingly rent burdened.”
As a condition of using the software, property owners share private information with RealPage to generate the highest rent prices, according to the lawsuit. The practices amount to a monopoly and interfere with fair competition, federal officials said — an exclusive club that only the wealthiest landlords can afford to join.
“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high,” Doha Mekki, acting assistant attorney general with the justice department’s antitrust division, said in a statement. “Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country.”
Greystar, one of the landlords targeted in the amended lawsuit, is the largest property management group in the U.S. with more than 700,000 homes for rent. The company runs multi-family apartment buildings in San Jose including Elements, The Standard and Avana San Jose — owning at least 653 homes in the city according to public apartment listings.
A spokesperson for Greystar directed San José Spotlight to a statement on its website.
“We are disappointed that the (Department of Justice) added us and other operators to their lawsuit against RealPage,” the statement reads. “Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices. We will vigorously defend ourselves in this lawsuit.”
Camden Property Trust owns a two-story apartment complex in San Jose, and Pinnacle Property Management Services also runs properties in the city and county. A statement from the company disagrees with the allegations made in the amended complaint against RealPage.
SV@Home Policy Director Alison Cingolani said she hopes the expanded lawsuit provides accountability for landlords using algorithms and software to drive up rent prices.
“This practice is especially harmful to our lowest income and most vulnerable residents, many of whom are already paying more than half their income for housing every month,” she told San José Spotlight. “We hope the San Jose City Council also chooses to take action and demonstrate leadership in protecting residents from algorithmic rent setting.”
City officials on the Rules and Open Government Committee voted in October to shelve a proposal to ban landlords from using algorithms to set rent prices, opting to direct city employees to study the topic instead. Housing Director Erik Soliván said they expect to come back with an update at the end of January.
Huascar Castro, Working Partnerships USA transportation and housing director, said he anticipates a detailed report from city officials in light of the amended federal lawsuit.
“A lot of these companies have profiles in the city of San Jose and own a lot of units … meaning there’s potential use of this tool in units affecting renters right here in the city,” he told San José Spotlight. “So this is a proposal we have been championing for a long time.”
Contact Vicente Vera at [email protected] or follow @VicenteJVera on X.
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