Nonprofit exposes reason behind sharp rent increases
It's no secret that there's a housing crisis in America. That's not to say that there aren't enough houses for people to live in, there are plenty of houses and apartments available, they're simply unaffordable. Over the past several years the cost of housing has increased to an amount that is so out of reach for the average person, that homelessness is on the rise as people unable to pay their rent are evicted.
While the housing prices continue to climb, wages have essentially stayed the same. This has led to people across the country making difficult decisions in an attempt to keep a roof over their heads. But most people have no idea why rental rates have skyrocketed in less than a decade. One nonprofit is exposing where this unexplained increase is stemming from with the help of the attorney generals' of Arizona and Washington D.C..
More Perfect Union is a nonprofit media organization aimed at empowering working people. Recently, the organization tackled the American housing crisis with a pretty shocking discovery.
There's a singular company behind the exorbitant housing prices in Arizona and D.C. though the states are thousands of miles away from each other. The attorney general of the District of Columbia calls the company an illegal housing cartel due to the tactics used and the money made. The company is called RealPage, which uses an algorithm that pulls from renters confidential information to skew the housing prices.
Landlords sign a contract to work with RealPage, but according to documents uncovered by the investigators, if a landlord pushes back against the rates, the company can expel them from the program. But what about all the empty units? There doesn't seem to be a concern because the rates are so high that the landlords still increase their revenue even when some apartments are empty for long periods of time.
This may feel a bit like a movie plot, but it's not science fiction. RealPage may be operating in multiple states across the country contributing to the unaffordable price of housing for American citizens.
a view of a city with tall buildingsPhoto by Gabriel Valdez on Unsplash"We're talking about an algorithm that aggregates otherwise confidential information that the landlords have that ordinarily they would not share with their competitors," Washington D.C. Attorney General, Brian Schwalb says. "That allows then the algorithm to spit out a pricing recommendation. All designed to keep the overall market at its highest peak."
Arizona Attorney General, Kris Mayes explains, "they're not charging what the market can bear they're controlling the market. It's leading to the exacerbation of our affordability crisis, our housing crisis here in Arizona."
RealPage's practices are so concerning that the Federal Trade Commission and the Department of Justice stepped in to remind landlords and companies of antitrust laws. "Your algorithm can't do anything that would be illegal if done by a real person," the text reads on the screen, in part.
Landlords who sign up are bound by the rules set by RealPage, which state RealPage sets the rental rates, leaving landlords little option to opt out. They company even sends out "policing agents" to enforce these prices by physically checking on the landlord and leasing agents. Landlords are lured in with the promise of increased profits, some may not realize at the outset that the prices their renters would be expected to pay would be unaffordable causing some to become homeless.
But with RealPage working with landlords across the entire state, every rental property would increase nearly simultaneously, leaving renters no choice but to pay more than they can afford. In reality this may mean getting second and third jobs, foregoing important medications, pulling children out of afterschool care to allow them to care for themselves and more just to afford housing.
The problem with algorithms setting rental prices and anything else that has to do with human needs is that computer codes are not human. They don't know that Alice living in 3B is a single mom out of work because she just had a mastectomy. An algorithm doesn't factor in that Marc in the split level is having to drive an hour every day to help care for his elderly mother or that Carol on the first floor left an abusive relationship and this was the only place she could afford.
Leaving the lives of people up to an algorithm can have disastrous affects, and the lawsuit the attorney generals are bringing will highlight that concern using RealPage as the example.