D.C. Attorney General Brian Schwalb is suing 14 of the city’s largest landlords, alleging in a sweeping antitrust lawsuit filed Wednesday that they colluded with property management software company RealPage to artificially inflate rent prices by up to 7% across roughly 40,000 apartments in the District. 

Schwalb’s lawsuit alleges that the defendants – including big names like Greystar, William C. Smith & Co., Bozzuto Management Company, and JBG Smith Properties – engaged in a price-fixing scheme by using RealPage’s “Revenue Management” Software to determine rent prices, effectively delegating their price-setting ability to a single entity rather than competing among each other. 

“[Defendants] communicated openly about their anticompetitive scheme at public events and through advertising campaigns, and actively worked to recruit new members into what amounted to a District-wide housing cartel,” Schwalb said in a statement. 

RealPage is a Texas-based technology company whose RM Software has become dominant in the multifamily housing market – and incredibly lucrative for the company. 

The premise of Realpage’s RM Software is simple: It generates a suggested rental price to charge for any particular apartment. It does so based on statistical models that estimate supply and demand for rental housing specific to the apartment’s geographic area and type of unit. The proprietary and non-public data RealPage collects, courtesy of the property owners and managers it contracts with, is key to these algorithms. 

RealPage charges landlords both an initial setup fee for use of the software as well as a monthly fee for units included in the database, which has netted RealPage hundreds of millions of dollars in revenue, per the lawsuit. RealPage also pressures its contractors not to deviate from the rental prices generated by the software, and per Schwalb’s suit, landlords agree to charge the software-generated rental prices in more than 90% of cases. 

Landlords using RealPage’s software have allegedly advertised that it allows them to charge up to 20% more than they would otherwise, while RealPage itself represents that landlords can increase revenue by 2-7% by using its price-setting software. These figures translate to millions of dollars collectively over-paid by renters in the last four years alone, Schwalb’s lawsuit alleges. 

The lawsuit comes as rents in D.C. continue to rise and amid a worsening national housing affordability crisis. More than 44,000 renter households in D.C. are “severely housing cost-burdened,” meaning that they spend at least half of their income on rent.

Many of the apartments whose rental prices were determined by this software – primarily large, 50+ unit multifamily buildings – are clustered along Connecticut Avenue in Northwest D.C., 14th Street from Columbia Heights to Shaw, and in NoMa and Navy Yard. 

The lawsuit further alleges that the defendants agreed in writing to share competitively sensitive data, like the rents they charge across all of their properties, to RealPage, which it fed into its software. By sharing this sensitive information, the lawsuit alleges, the landlords named in the suit conspired to limit their collective housing supply and drive up rent prices. 

“Defendants understand that recruiting more would-be competitors to their anticompetitive scheme only increases their mutual ability to extract unlawfully higher rent, confident that their competitors will not dramatically undercut their prices,” the lawsuit says. 

Defendants named in the suit include Avenue5 Residential, LLC; AvalonBay Communities, Inc.; Bell Partners, Inc.; Bozzuto Management Company; Camden Summit Partnership L.P.; Equity Residential; Gables Residential Services, Inc.; GREP Atlantic, LLC; Highmark Residential, LLC; JBG Smith Properties, LP; Mid-America Apartments, LP; Paradigm Management II, LP; UDR, Inc.; and William C. Smith & Co., Inc. 

These landlords collectively represent more than 58,000 of the available multifamily housing units in D.C.  Spokespeople for most did not immediately respond to DCist/WAMU’s request for comment. A spokesperson for WC Smith said in an emailed statement that the company had not yet been served with the complaint and “as a result lack any actual information about the specifics of the matter,” but added that as a general policy they do not comment on pending litigation. A spokesperson for JBG Smith said the company does not comment on pending litigation. A spokesperson for RealPage did not immediately return DCist/WAMU’s request for comment. 

In total, Schwalb’s staff calculated that RealPage’s software was used to set rent prices at more than 40,000 apartments across D.C. – nearly one out of five of the 210,000 total rental apartments in the city – and about 60% of all the units in large, 50-plus unit multifamily buildings. Across the Washington-Arlington-Alexandria metro area, more than 90% of the units in large buildings are priced using RealPage’s RM software.

“RealPage and its clients … have transformed a competitive marketplace into one in which competing landlords work together for their collective benefit at the expense of renters,” the lawsuit reads. “Indeed, when a former high-ranking manager at Defendant Greystar was asked whether landlords use the RealPage RM Software to collude on raising rental prices, he responded that of course they did—it’s the entire reason landlords used the software.”

The company was also the subject of a 2022 investigation by ProPublica, which found that, in some large cities, RealPage’s market dominance is so profound that its software is used to set the price for nearly every available rental apartment. 

Schwalb’s lawsuit seeks both injunctive and financial relief for this practice, asking a judge to order the defendants to stop this practice and award D.C. “any other equitable relief [that] the court finds appropriate … to restore competitive conditions in the markets affected by defendants unlawful conduct.”