Major Landlord Greystar Reaches $7 Million Settlement Over Rent Algorithms
In a significant legal development, Greystar, the United States' largest property management company, has agreed to pay $7 million to resolve a lawsuit filed by nine states. The lawsuit accused the real estate giant of employing controversial rent-setting algorithms that authorities believe artificially drove up housing costs for countless residents.
The Legal Crackdown on Algorithmic Collusion
The proposed settlement was officially filed on a Tuesday in a federal court located in North Carolina. This case is part of a broader wave of antitrust legal actions targeting software firms like RealPage, whose products are alleged to have enabled property managers to illegally coordinate pricing strategies. Democratic California Attorney General Rob Bonta was unequivocal in his condemnation, stating, “Whether it’s through smoke-filled backroom deals or through an algorithm on your computer screen, colluding to drive up prices is illegal.” He further emphasized his commitment to holding companies accountable for exacerbating the national affordability crisis.
Terms of the Settlement and Broader Implications
As a core condition of this landmark settlement, Greystar is now prohibited from using any software that relies on confidential data from competing landlords to determine its rental prices. This is not an isolated incident for the company; just last month, Greystar separately agreed to a $50 million payout to settle a class-action lawsuit concerning its use of RealPage. Furthermore, in August, the company entered into a non-monetary agreement with the Department of Justice to cease similar practices.
In an official statement released on a Wednesday, Greystar expressed that it was “pleased this matter is resolved and remain focused on serving our residents and clients.” Based in South Carolina, Greystar manages a staggering portfolio of more than 946,000 rental units across the nation, according to the National Multifamily Housing Council.
RealPage's Defense and the Regulatory Backlash
RealPage, the Texas-based company at the heart of the controversy, has consistently denied any misconduct. The company argues that plaintiffs misunderstand its product's functionality, contending that the primary cause of high rents is a fundamental lack of housing supply. RealPage also claims its software, which provides daily pricing recommendations for available apartments, often suggests lowering rents to maximize revenue through high occupancy rates. The firm states its technology is used on fewer than 10% of U.S. rental units, with its recommendations being followed less than half the time.
Despite these claims, critics maintain that the software's access to a vast pool of proprietary data empowers landlords to systematically charge the maximum possible rent. In response, the governors of California and New York signed new laws last month to clamp down on such rent-setting software. A growing number of cities, including Philadelphia and Seattle, have also passed local ordinances against the practice.
The states involved in this settlement are: California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, and Tennessee.
