MEMPHIS, Tenn. — If you don’t own property, rent is a monthly source of angst and anxiety.
“It is extremely expensive,” said a 23-year-old woman facing eviction.
She asked FOX13 to hide her identity because she had yet to tell her family. The renter struggles to pay the $1,270 a month for her one-bedroom apartment at Kirby Station.
”I don’t think is worth almost $1,300 dollars a month for a one-bedroom,” she said.
Mid-America Apartment Communities owns Kirby Station, plus about 100,000 other apartment units in 16 states. According to this report to MAA investors, rent has increased at apartments across the country: from a 3.6% increase in 2019 to a 14.5% increase in 2022.
The Germantown-based company is raising rents with the help of a software produced by RealPage.
“You need to think big!” said an animated character in this marketing video produced by the company. “So we did by aggregating and extrapolating big data to get big returns for our customers.”
RealPage promises big profits for landlords.
“You can outperform every quarter, regardless of the economic climate,” said the character in the marketing video. “Consistently accelerating rents during market upswings and maintaining a revenue premium during downturns.”
“It is able to come up with a price that is the best price for that unit on that day at that time in space,” said a woman in this marketing video.
RealPage advertises it has 30,000 clients who control 10,000,000 rental units.
“It is setting the market,” said Rep. Antonio Parkinson (D) in the Tennessee House of Representatives. He represents part of Memphis, a city where 53% of people rent.
“It’s causing these markets to be inflated and possibly even overinflated,” he said.
Tenants are catching on. A class action lawsuit accuses RealPage and several big rental companies, including MAA, of artificially inflating prices with the software.
The lawsuit alleges the practice violates federal antitrust law by helping landlords collude and avoid competition.
“I do think this is an antitrust violation,” said Rebecca Haw Allensworth, a Vanderbilt University professor and expert in anti-trust law.
The Sherman Antitrust Act, created in 1890, prohibits competitors from fixing prices in the U.S.
“The landlords that are using it are going to say, ‘Well, we didn’t agree to anything,’” the professor told FOX13. “‘We just type our information in. It gives us a recommendation and we decide on our own without an agreement with our competitors to charge that price.’”
RealPage told FOX13: “The recent lawsuits are based on inaccurate and misleading reports, and the filed complaints are wrong on both the facts and the law. RealPage strongly denies the allegations and will vigorously defend against them.”
After members of Congress accused RealPage of anti-competitive practices, the Department of Justice started an antitrust investigation late last year.
A RealPage spokeperson told FOX13 their “products are purposely built to be legally compliant … In fact, many of our products – including our revenue management software – are designed to aid apartment providers in their compliance with fair housing and other laws.”
“Landlords will tell you regulation is going to discourage investment,” said Rhodes College professor Austin Harrison, an expert on urban studies and challenges large cities face. “I think that case is becoming harder and harder to make just based off of the profits that these individuals firms are making.”
Harrison told FOX13 the financial tech helps the rich get richer.
“The financial piece is part of a ‘Walmart-arization,’ if you will,” he explained. “Like a corporatization of a rental market that in Memphis, and in other cities like it, used to be predominantly mom and pop.”
FOX13 made multiple attempts to reach Mid-America Apartment Communities about its use of RealPage and rental prices. FOX13 called three times, emailed three times and submitted an online request for comment. A crew also physically visited the company’s Germantown headquarters to request an interview, but have not heard back.
As the 23-year-old renter facing eviction, she asked her landlords to replace tech with tolerance, and profits with people.
“That isn’t fair,” she said. “Computers don’t live the lives that we live.”
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