FBI's Latest Investigation Could Explain Nationwide Rent Increases

A rental property investigation by the FBI may have led to a conspiracy as to why rent has gone up across the nation.

According to Entrepreneur, the FBI on May 22 made an unannounced raid of Cortland Management, which is an investigation into an “alleged rental price-fixing conspiracy that may have already impacted millions of Americans.”

The unexpected trust was an investigation into criminal antitrust by the U.S. Department of Justice (DOJ) into RealPage, a $9 billion software company that recommends rent raises on millions upon millions of housing units around the nation.

According to RealPage blog posts, Cortland, based in ATL, which owns close to 85,000 units as of 2022, utilized RealPage's algorithm to "ensure consistent vendor pricing for their communities from Arizona to Georgia."

The company effects can most noticeably be seen in Atlanta, of course, where software-based pricing impacts 80% of rentals. Since 2016, rentals in the city have grown to 80% and higher vacancy rates have not driven prices down.

According to multiple lawsuits filed in the past two years in California, Arizona, New York, among other states, the problem with RealPage is that “its algorithm increases rental prices in response to data collected from landlords — not according to demand.”

In a February lawsuit announcement against RealPage, landlords "were not competing at all," Arizona Attorney General Kris Mayes said.

"They were colluding with one another," Mayes said.

Landlords gave RealPage informed information regarding rent prices, lease terms, amenities, move-out dates, and occupancy rates, according to the Arizona lawsuit, and others filed.

"Using this sensitive data RealPage directed the competitors on which units to rent, when to rent them, and at what price," Mayes said. "This was not a fair market at work, this was a fixed market."

RealPage’s impact goes far. Sixty percent of apartment buildings in the area set prices using RealPage, according to a DC lawsuit. And in Phoenix, Arizona, “70% of apartment units were owned or managed by companies using its software.”

Additionally, more than 16 million rental units across the U.S. used RealPage's algorithm as of a 2020 blog post.

"That's a very large chunk of the total inventory in the country when you consider that there are about 22 million investment-grade apartments in the US today," Tracy Saffos, industry principal at RealPage, said in the same post.

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