Is there a single business in the U.S. that’s resisted raising prices since early 2020? Good luck finding one. But there’s a fine line between passing along higher costs of doing business to the customer, and “fixing” prices.
Case in point: Federal Bureau of Investigation (FBI) officers conducted a pre-dawn raid of Cortland Management in Atlanta offices. The FBI and Department of Justice (DOJ) suspect Cortland is engaging in criminal anti-trust violations by artificially inflating apartment rents in multiple markets.
Keep in mind that since the end of 2019 to 2023, rents increased about 30% nationwide, according to Zillow data. To land itself squarely on the feds’ radar, and spur a separate civil anti-trust case, Cortland apparently went “too big” and made itself a target.
The company “rents out 85,000 units across 13 states [but] is allegedly part of a much bigger conspiracy orchestrated by a software and consulting firm named RealPage to increase rents nationwide by coordinating landlord pricing decisions and holding apartments off the market,” according to Matt Stoller of Big.
RealPage crunches real-time data — rent prices, occupancy, applicants — from thousands of landlords. “Landlords adopt RealPage recommendations on pricing 80-90% of the time, which explicitly drives up revenue by holding apartments off the market,” notes Stoller. RealPage is the go-to price source for about 70% of the rental market, according to The Hill.
FBI to Go After More Real Estate Firms
Cortland is just the first domino to fall in the DOJ’s anti-trust sweep. The Hill reports the DOJ is looking into other property management firms and rental managers over price-fixing allegations.
The civil anti-trust case against RealPage, Cortland and a handful of other real estate companies refers to a “cartelization” of landlord price-setting. Plaintiffs are individuals who feel they were gouged for rent at higher-than-market rates.
Does 80 to 90 percent adherence to the price recommendation from an algorithim prove that a fix is in? Maybe, maybe not. But 80-90% smells fishy and that’s why the feds are pursuing their own fishing expedition — they smell chum in the water.
