This summer, socialist Council Member Kshama Sawant and the renters’ rights movement are calling on Seattle City Council Democrats to pass Sawant’s rent control legislation. It’s way overdue. In our majority-renter city, with rents spiraling upward over the long term and more working people, students, and retirees economically pushed out every month, we urgently need rent control.

Rent control without any corporate loopholes, as our movement is demanding, would limit increases to the rate of inflation and would ban landlords from jacking up rents when new tenants move in. It would help tens of thousands of renters stay in their homes and strike a blow against racist gentrification. Sawant’s legislation would institute rent limits as soon as the State Legislature lifts its immoral, pro-corporate ban on residential rent control. More than 35,000 have signed petitions in support of such strong rent control.

Big landlords and their defenders in the political establishment and the media are of course aghast. They claim that the “free market” supply and demand should dictate rents. That is pure fiction. 

What they don’t tell you is that for the last seven years, rents in Seattle have been controlled–just not in the interest of renters.

Ever Heard of RealPage? 

Several lawsuits allege a “cartel” of dominant, for-profit landlords have tightly controlled rental rates since at least 2016 by engaging in shady price-fixing to manipulate housing costs and to artificially hike rents. The linchpin behind this scheme is a company called RealPage, which the lawsuits say “coordinates pricing” with the largest apartment property management companies in the US, landlords that collectively control nearly 20 million homes. In Seattle, they control a majority of rented apartment buildings–think big Seattle landlords like Greystar, Equity, Essex Property Trust, Thrive Communities, Avalon Bay, among others.

The scheme–functionally, rent control designed by and for profiteering landlords, imposed on us secretively–was exposed last fall by a comprehensive ProPublica report and is now the subject of around a dozen lawsuits, including three class action lawsuits filed on behalf of Seattle renters: A national lawsuit filed by Seattle and Atlanta renters; a lawsuit filed by local renters, and a lawsuit charging price collusion in eight different college communities, filed by a University of Washington student.

The lawsuits charge that RealPage and the big landlords “developed and used proprietary artificial intelligence and algorithmic decision-making systems to help big housing landlords operate as a cartel to push up rents above competitive levels, all to increase profits at the expense of thousands of unwitting tenants.” RealPage’s technology, the suits allege, “helps facilitate anti-competitive price-fixing on an unprecedented scale.”

The question for Democrats is not whether Seattle should or should not have rent control. The question for Democrats is what system of rent-setting they support. If they reject Sawant’s legislation or attempt to water it down, their vote will be an endorsement of the profit-maximizing scheme of the big corporations.

Class Solidarity… Among Landlords

In a normal marketplace, landlords theoretically set rental rates for their apartments based on their own independent assessment of “what the market will bear.” They might survey area rents to figure out the right price. But it would be illegal for them to directly collude with competing landlords to set prices, so they avoid doing that–at least openly. Not wanting to have empty apartments, landlords will tend to set rents that are not so high that it puts them at a competitive disadvantage; at least that’s the theory we’re repeatedly offered by pro-capitalist economists. 

A few years ago, RealPage figured out a way for landlords to escape this competition conundrum. The company began offering landlords what it called “pricing optimization” software, essentially a pricing algorithm “designed to aid landlords with driving rent up as high as possible,” according to one of the lawsuits. “Accelerate Rents During Market Upswings & Maintain Revenue Premium During Downturns,” a RealPage promotional blurb cheerfully announced.

Participating landlords were required to provide to RealPage, on a continual basis, pricing and supply data for every single apartment they manage. This vast ocean of data went into RealPage’s “pricing optimization” software. Driven by the latest in artificial intelligence, the algorithm then instructed landlords exactly how much they could upcharge every apartment they controlled.

No landlord, the lawsuits point out, “would agree to share its competitively-sensitive and private pricing and supply information to benefit its competitors, unless it knew every other RealPage client reciprocated by sharing their data, too.” But the landlords “as a whole benefit when they act in concert to share such information for one another’s benefit through the RealPage pricing algorithm.”

For the scheme to work, the landlords had to “agree to follow RealPage’s pricing instructions the vast majority of the time,” the lawsuit says. “If you have idiots undervaluing, it costs the whole system,” one of the RealPage algorithm designers acidly put it. The bosses certainly understand the importance of class solidarity.

RealPage boasted to landlords that the company’s scheme “can help you outperform the market 3% to 7%.” This held true, the lawsuits say, even if the landlords left some apartments vacant for longer periods for lack of an immediate renter at the higher rate. The logic—which bore out in experience—is that renters get discouraged by the sustained higher prices and eventually are forced to accept them. 

RealPage’s algorithm replaced having property managers set prices on their own. The problem with that, the RealPage program architect said, was “there’s way too much empathy going on here.” RealPage’s big data took negotiations and human contact out of the pricing process and helped landlords boost their profits. 

There’s an important insight into how the wealthy cooperate with one another in their collective interest. The scheme wouldn’t work unless enough landlords agreed to follow the figures produced by the “pricing optimization” algorithm. If there are not enough RealPage landlords to constitute a controlling force in the market, non-participating landlords would undercut their RealPage competitors and the venture would collapse. 

The Impact at Home

Around 2016, RealPage reported that enough big landlords had joined their venture to achieve “critical mass for revenue management adoption,” in the company’s words, according to one of the lawsuits. The Seattle-focused lawsuit notes that RealPage-participating landlords today control 60% of the core Seattle apartment building market—defined as downtown, Capitol Hill, Central District, Queen Anne, and South Lake Union—and 57% of the greater Seattle market. That is critical mass, not a case of a few “bad apples.”

For the last seven years, Seattle and other major cities around the US have allegedly had rents controlled by RealPage and the big landlords to enlarge their already-obscene profits. Today, every one of the top-ten apartment building management companies in the US, many of whom are big landlords in Seattle, participates in RealPage’s scheme, according to the lawsuits.

It seems pretty clear that this scheme has driven housing inflation in Seattle and elsewhere. In Seattle’s Belltown neighborhood, the ProPublica investigation found that 70% of the major apartment buildings were controlled by RealPage landlords that used the algorithm in at least some of their buildings. Not surprisingly, rents skyrocketed in the downtown neighborhood. 

At a 2021 national conference of real estate tech executives, one RealPage vice president gushed that rents had recently shot up by as much as 14.5%. He asked a colleague, another RealPage executive, what role the algorithm had played in the rent inflation. “I think it’s driving it, quite honestly,” the executive replied. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.” 

“The software’s design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation’s largest landlords to indirectly coordinate pricing, potentially in violation of federal law,” the ProPublica investigation concluded. 

Actually, that is a bit of an understatement. Sometimes the collusion was quite direct, one lawsuit argues. The biggest landlord in the US, Greystar, controls at least 102 apartment buildings in the greater Seattle area. The Seattle lawsuit quotes a former Greystar employee as saying that in addition to receiving daily RealPage rent updates, they were directed to call around to other landlords in Seattle. “You’d call up the competition in the area. Sometimes there’d be a list of 10 people to call. Sometimes just one. You’d ask what they are charging for their apartments. Then you’d literally change the prices right there on RealPage. Manually bump it up,” the witness said. “It was price-fixing… what else can you call it when you’re literally calling your competition and changing your rate based on what they say?”

Rising Rents, Rising Corporate Profits

The RealPage scheme helps explain why your rents have gone up, even if you’re not in a RealPage building. Other landlords, seeing how the big property owners around them are hiking rents, follow suit. That’s why average Seattle-area rents across all apartments rose nearly 92% last decade, while median household income went up only 47%. This is not some sort of magical, inanimate “marketplace” at work. I believe it’s profiteering, pure and simple.

Also rising alongside rents: corporate profits. Landlords said they were initially skeptical about RealPage’s pricing recommendations but, as one executive revealingly put it, “The beauty of [the algorithm] is that it pushes you to go places that you wouldn’t have gone if you weren’t using it.” RealPage boasts of a “400 percent ROI [return on investment]” for landlords that sign up.

The price-gouging by the RealPage-participating companies is mind-boggling. In 2022, Mid-America Apartment Communities (MAAC) registered $654 million in profits, a 19% increase over the previous year, reporting triumphantly to major investors that it performed “ahead of expectations as higher fee income along with continued growth in average rent per unit.” AvalonBay Communities—a big landlord in Seattle and surrounding cities – logged $1.1 billion in 2022 profits, a 13% increase, based on “a double-digit rent increase on the unit inventory we leased and occupied during the quarter, a very favorable outcome that sets us up well for 2023,” the CEO told his investors. Essex Property Trust—a huge West Coast landlord with at least 29 buildings in the Seattle area—recorded $408 million in 2022 profits. Equity Residential—another national landlord with 42 buildings in Seattle—toted profits of $807 million, “a stellar 2022,” the company reported. 

MAAC, AvalonBay, Essex, Equity, Greystar, and others are among the landlords named in the price-fixing lawsuits along with RealPage. Each dollar of profit they gleefully reported to investors is money robbed from working people—money that could have gone to diapers and groceries, new clothing, a night out, a downpayment on a new washing machine or car, or savings for college. Instead, it ended up in the pockets of Wall Street banksters and the billionaire class.

Furthermore, the price-gouging drives racist gentrification. Seattle’s Central District (CD) is at the epicenter of the city’s thinning Black community. At 23rd and Union in the heart of the CD, Thrive Communities—one of the defendants in the price-fixing lawsuit—is the dominant landlord, controlling 795 apartments in a four-block area. The company charges nearly $2,000 and up for one-bedroom apartments, and just slightly less for studios. Thrive’s rates are $350 to $1,300 more per month than the few affordable apartments in the area. Black working people used to constitute a majority of Central District homeowners and renters, but today that figure is 15% and dropping. Shamelessly, the gentrifying landlord celebrates Black art and historical figures on the outer walls of its showpiece apartment building. 

From all indications, RealPage executives are not going to limit themselves from siphoning money from us to the ruling class just by jacking up rents. The company is assembling huge data banks of renter histories – 30 million individual records at last report. The new tool, RealPage boasts, “leverages the power of AI and machine learning to precisely analyze your applicant pool, which delivers a stronger predictor of future performance and renter behaviors.” 

You cannot separate out the Orwellian nature of RealPage from the landlords: The national lawsuit details no fewer than 163 examples of corporate executives migrating from landlords to RealPage or RealPage to the landlords. It’s an incestuous scheme, a revolving door. 

Apologists for this scandalous reality maintain that since capitalists are putting their money on the table and taking “risks,” they are entitled to the rewards. They extol the merits of the so-called free market. But there’s nothing free about the market in the first place—profits come from under-paying workers and exploiting those same workers as consumers. Price-fixing, as the lawsuits allege, takes this to another level—there’s nothing risky for the landlords who’ve gamed the system and guaranteed themselves megaprofits through collusion.

Don’t Be Fooled, Inaction Is Unacceptable

Of course, RealPage and the big landlords are not going to come out and oppose real rent control by publicly defending their “pricing optimization” software. They are happy to let the smaller-sized landlords speak publicly against every renters’ right legislation, not only rent control. The truth is that while most of the smaller-sized landlords are not the billionaire players like the major shareholders of Greystar and the like, they often own ten rental homes or more, making them far bigger and more profitable than the real “mom-and-pop” landlords who have one or two rental homes as a source of income. Moreover, because many of the big landlords chop up their holdings into dozens of individual-building limited liability companies, there is no way to parse through the legal difference even between a smaller landlord owning multiple units and the giant corporations. Truly small landlords who don’t gouge their tenants will not be affected by our movement’s rent control legislation.

How to solve the chronic housing crisis? Big business will always find a way to game the system to their benefit. That is how capitalism operates. To make housing permanently affordable, we need to take the profiteers out of the equation by bringing housing under public and democratic control of working people. Most immediately we need—at a minimum—full rent control. Renters, rank-and-file union members, and socialists will need to fight to win it, just as we did to win the Amazon Tax to expand publicly-owned social housing. 

It’s good that renters and their lawyers have sued RealPage and the landlords. But lawsuits will not solve the problem. At best, there will be out-of-court settlements years down the road, some tenants will get payouts, and the companies will go on to find new ways to suck every possible penny out of tenants’ pockets. The only way to stop the landlords from pursuing such schemes is to block it with full, comprehensive rent control.

“The data uncovered by the ProPublica investigators makes a devastating case for Seattle to have citywide rent control without any loopholes,” Sawant said.

That is why our renters’ rights movement is demanding that Democrats stop posturing and act. This summer, the Seattle City Council can pass Council Member Sawant’s rent control bill, and in January the State Legislature can repeal the current state ban on residential rent control. Democrats dominate the political establishment in Seattle. They hold supermajorities in the state House and Senate, and they only need a simple majority to overturn the ban. They control the Governor’s mansion.

Inaction year after year by the political establishment has allowed RealPage and the big landlords to set up and maintain their scheme. The choice for Democrats today is whether they will continue to support that status quo through their inaction and excuses, or whether they will stand with renters by adopting real, comprehensive rent control as our movement has been demanding for the last ten years.

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