SEATTLE — A software company and nine property management groups are being accused of artificially inflating rents. An investigation found the software that sparked the lawsuit is used by management companies in Seattle.
The lawsuit was filed in U.S. District County in San Diego by renters. It alleges the property management companies and Texas-based software company RealPage formed a cartel to artificially inflate rent prices and decrease the supply of multifamily real estate in violation of federal law.
RealPage owns software that uses an algorithm and analyzes data to suggest rent prices. The software is used by some of the nation’s largest property management companies, including Greystar and Essex Property Trust, Inc.
While the software is used nationwide, an investigation by the non-profit newsroom ProPublica found this software is “overwhelmingly” controlled by RealPage clients in Seattle’s Belltown neighborhood.
ProPublica’s investigation found that "70% of apartments [in Belltown] were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage."
“That’s the question, what are people supposed to do with this tool that [property managers] are using?” said Violet Lavatai, the executive director of the Tenants Union of Washington.
Lavatai said she takes calls every day from people who feel like they're being priced out of the Seattle market and added that many people are opting to move into their cars.
“Seattle is outrageous,” said Lavatai. “I mean, outrageous, and I think this is a tool that they're using to actually try to get away with increasing the rent.”
Apartmentlist.com reports Seattle has some of the fastest rent growth for a major city. However, the website said September saw a 1.1% decrease in the rental pricing. It’s the first decrease in seven months.
“I’ve been in housing for a while now, and so you see how it's almost like a game of chess with tenants,” said Lavatai. “They say the tenants need [property managers], well, [property managers] actually need the tenants. They’re running the business. It’s a relationship, but one of them has the power to increase the rent.”
RealPage responded to ProPublica’s follow-up article about the lawsuit saying the company “strongly denies the allegations and will vigorously defend against the lawsuit.”
“I really think that somebody is calling them out and I agree with them,” said Lavatai.