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California Bill Would Block Landlords from Banning Pets In Rentals

By
John Triplett
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California Bill Would Block Landlords from Banning Pets

The bill, AB 2216, would prohibit banning pets in rentals and allow landlords to ask about pet ownership only after a tenant’s application has been approved, according to reports.

According to its author, Democratic Assembly member Matt Haney, the bill may be the first-in-the-nation law to require landlords to accept pets.

Haney said the intention is to bar property owners from asking about pets on applications, prohibit additional monthly fees for pet owners — or “pet rent” — and limit pet deposits. Haney says isn’t trying to force landlords to accept all pets. Instead, he said his bill will make it easier for pet owners to find an apartment by easing some of the restrictions they face.

The legislation, which is sponsored by the Humane Society of the United States, is aimed at solving a big problem Haney said he sees in the rental world: an overabundance of tenants with pets and a shortage of landlords willing to accept them.

“A two-tiered system that punishes people for having pets, or treats them differently, or has a greater burden on them just for that fact, should not be allowed in the law,” Haney told KQED. “What we see too often is just these blanket prohibitions of pets with no good reason for it, with no required justification for it and no protection of pet owners, who represent the majority of California’s renters, to be able to access housing just like anyone else,” Haney said.

“We never intended to say that landlords can place no restrictions at all,” Haney told POLITICO. “Nobody is going to be forced to take dangerous dogs … of course there’s going to be cases where restrictions make sense.”

Haney’s staff analyzed Zillow apartment listings and found that 20% of San Francisco apartments allowed cats and dogs of all sizes, while 18% of those in Sacramento and 26% in Los Angeles did. Survey research finds that two in three households nationwide own pets, and 72% of renters report that pet-friendly housing is hard to find.

Property owners, however, are already expressing concerns about the proposal. Krista Gulbransen, executive director of the Berkeley Property Owners Association, said her opposition comes down to risk: Pets have the potential to damage property, she said, and limiting owners’ discretion to take on that added risk while stripping them of the pet-deposit safeguard puts them in a terrible position.

“The biggest concern is just not being able to make that determination of risk and make a decision based on that,” Gulbransen said.

“There’s downsides every single time the Legislature does something, then they blame us because rents are going up,” Debra Carlton, executive vice president of state government affairs for the California Apartment Association told Politico. “It’s hard to get stuff built, and then they just regulate us.”

Politico said to be sure, Carlton still isn’t thrilled with all of the provisions of the scaled-back version, either. Not charging monthly for pets means landlords will just raise everyone’s rent to cover potential damages, especially if they can’t hike security deposits without running up against the cap on deposits that a different Haney bill last year instituted.

“Legislators are famous for doing the hard, hard, furthest thing from what they meant to do so that they force us to negotiate and they give us something we might not have wanted anyway,” said Carlton.

California doesn’t really want to make landlords accept pets

Arizona Bill Seeks to Stop Landlord Dog Breed Discrimination

Welcoming More Pets Can Lead To Better Retention, More Revenue

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Multifamily Rents Inch Up Ahead of Spring

By
John Triplett
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Multifamily rents are creeping up as spring approaches, and many locations saw rents rise slightly in February, according to Yardi Matrix.
While rents are basically the same as they were about 18 months ago in most areas, “The stability on the surface belies a host of changing trends that are keys to determining the direction the market takes from here,” Yardi Matrix writes in the report.

Multifamily rents are creeping up as spring approaches, and many locations saw rents rise slightly in February, according to Yardi Matrix.

Metros in the Northeast and Midwest saw gains to counteract the rent declines in areas that saw strong new apartment inventory coming online.

Yardi Matrix says some of the Sun Belt metros have investors worried about the impact of new apartment unit deliveries.

Highlights of the Yardi Matrix February report

  • S. multifamily rents rose slightly in February, their first increase in seven months, in a sign that the market is stable. The average U.S. asking rent rose $1 during the month to $1,713, while year-over-year growth was unchanged at 0.6%.
  • The Northeast and Midwest continue to outperform over the short term, led by New York City. At 5.4%, the Big Apple not only leads major metros in rent growth over the last year but at 0.6% also was the top performer during the month of February.
  • Single-family rents slipped slightly, but fundamentals remain strong. Average single-family rents in the United States fell $2 in February to $2,133, while year-over-year growth fell 50 basis points to 1.2%. Rent growth was led by Boston, Raleigh and Orange County.

While rents are basically the same as they were about 18 months ago in most areas, “The stability on the surface belies a host of changing trends that are keys to determining the direction the market takes from here,” Yardi Matrix writes in the report.

Newly built apartments coming online are part of the story because, “Demand has remained healthy throughout the period that rents have been flat, as strong absorption was more than matched by an unusually high number of deliveries.”

Occupancy rates slide

“Occupancy rates will likely slide further, particularly in markets with large numbers of units under construction, as we forecast one million units to come online through the end of 2025,” the report says.

The report says the national occupancy rate was 94.5% in February, slightly down from the previous month and down 60 basis points year-over-year. Occupancy rates are either down or flat year-over-year in all but San Francisco (0.1%). Three Matrix top 30 markets are down by 1.0% or more: Atlanta (-1.2%), Indianapolis (-1.2%) and Austin (-1.0%).

Renewals slow further

Renewal rent growth is slowing, in line with the deceleration in asking rents. Renewal rents, the change for residents that are rolling over existing leases, fell 4.6% nationally year-over-year in January, down 20 basis points from December.

The national lease renewal rate averaged 64.8% in January. This is the first time that the national renewal rate has fallen below 65.0% since July 2021, as the range for the last six months has been between 65.4% and 66.8%.

Multifamily rents are creeping up as spring approaches, and many locations saw rents rise slightly in February, according to Yardi Matrix.The national lease renewal rate averaged 64.8% in January.

Read the full Yardi Matrix Report here

About Yardi Matrix

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

 

Rent Price Fixing by Algorithm is Still Price Fixing

By
By The Editors
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The FTC says landlords and property managers can’t collude on rental pricing because rent pricing fixing by algorithm is still price fixing

FTC: ‘Landlords and property managers can’t collude on rental pricing’

The Federal Trade Commission (FTC) and the U.S. Department of Justice have filed a joint legal brief saying price fixing by algorithm is still price fixing, according to a release.

“Landlords and property managers can’t collude on rental pricing. Using new technology to do it doesn’t change that antitrust fundamental. Regardless of the industry you’re in, if your business uses an algorithm to determine prices, a brief filed by the FTC and the Department of Justice offers a helpful guideline for antitrust compliance: Your algorithm can’t do anything that would be illegal if done by a real person,” write Hannah Garden-Monheit and Ken Merber in the FTC release in the business blog.

The legal brief highlights key aspects of competition law important for businesses in every industry:

  1. You can’t use an algorithm to evade the law banning price-fixing agreements, and
  2. An agreement to use shared pricing recommendations, lists, calculations, or algorithms can still be unlawful even where co-conspirators retain some pricing discretion or cheat on the agreement.

The FTC says in the release that “landlords increasingly use algorithms to determine their prices, with landlords reportedly using software like ‘RENTMaximizer’ and similar products to determine rents for tens of millions of apartments across the country.

“Efforts to fight collusion are even more critical given private equity-backed consolidation among landlords and property management companies. The considerable leverage these firms already have over their renters is only exacerbated by potential algorithmic price collusion. Algorithms that recommend prices to numerous competing landlords threaten to remove renters’ ability to vote with their feet and comparison-shop for the best apartment deal around.”

Agreeing to use an algorithm is an agreement

The FTC says “In algorithmic collusion, a pricing algorithm combines competitor data and spits out the suggested ‘maximized’ rent for a unit given local conditions. Such software can allow landlords to collude on pricing by using an algorithm – something the law does not allow in real life.

“When you replace once-independent pricing decisions with a shared algorithm, expect trouble. Competitors using a shared human agent to fix prices? Illegal.

“Doing the same thing but with an agreed-upon, shared algorithm? Still illegal. It’s also irrelevant that the algorithm maker isn’t a direct competitor if you and your competitors each agree to use their product knowing the others are doing the same in concert,” the FTC says in the release.

Price deviations don’t immunize conspirators

“Some things in life might require perfection, but price-fixing arrangements aren’t one of them,” the FTC says in the release.

“Just because a software recommends rather than determines a price doesn’t mean it’s legal. Setting initial starting prices or recommending initial starting prices can be illegal, even if conspirators deviate from recommended prices. And even if some of the conspirators cheat by starting with lower prices than those the algorithm recommended, that doesn’t necessarily change things. Being bad at breaking the law isn’t a defense.”

The rental housing industry is not alone

The FTC release says that the rental housing industry is not alone in using potentially illegal collusive algorithms.

“The Department of Justice has previously secured a guilty plea related to the use of pricing algorithms to fix prices in online resales, and has an ongoing case against sharing of price-related and other sensitive information among meat-processing competitors. Other private cases have been recently brought against hotels and casinos.

“Technology is a promise. Used correctly, it can make our lives healthier, safer, and more efficient. But its efficiency can also be used by bad actors to crush competition or bilk consumers in novel ways. No matter the tool law violators use, the FTC and the Department of Justice stand vigilant on the side of consumers and competition,” the release says.

Several lawsuits have been filed in different states against RealPage, Inc. and other major residential apartment landlords alleging price-fixing and conspiring to illegally raise rents

In 2023, ProPublica revealed that the RealPage software used algorithms to maximize profits, which experts stated could violate antitrust laws. RealPage has denied the allegations.

Hannah Garden-Monheit is director of the FTC’s Office of Policy Planning and Ken Merber is deputy assistant director of the FTC’s Anticompetitive Practices II Division. 

 

Stay Ahead of the Game: Avoiding Multifamily Hurdles Before They Occur

By
By The Editors
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 While challenges in the multifamily industry are inevitable, owners and operators can implement strategies to stay ahead of the game
One of the most significant multifamily challenges can be a weather event or another type of disaster, and failure to have a strategy in place can create chaos and confusion. The worst mistake any organization can make is to not have any defined emergency plans in place.

While challenges in the multifamily industry are inevitable, owners and operators can implement strategies to stay ahead of the game and overcome their effects.

By Gregory Lozinak

Anyone involved in the multifamily industry has witnessed the unique challenges this sector presents. Multifamily plays a vital role in providing housing solutions for individuals and families, which means the stakes are high, and the industry is not without its hurdles.  A lack of preparation can lead to disaster or even tragedy.

One of the most significant challenges can be a weather event or another type of disaster, and failure to have a strategy in place can create chaos and confusion. This can significantly and severely impact the outcome of any emergency. Another hurdle is the changing regulatory environment. Laws and regulations regarding resident rights, fair-housing practices and building codes can vary from state to state and are subject to change on the fly. Staying compliant with these regulations can be a daunting task.

The potential for resident disputes and conflicts, whether it’s complaints, maintenance issues or disagreements over lease terms, is always present. Managing these relationships requires skill, diplomacy and timeliness to maintain a community’s reputation and ensure resident satisfaction. Financial considerations also pose a constant challenge in the industry. Even modest missteps can quickly turn costly and further damage reputation. It’s likely not a matter of “if” properties will face these risks, but rather “when.”

While challenges in the multifamily industry are inevitable, owners and operators can implement strategies to stay ahead of the game
The potential for resident disputes and conflicts, whether it’s complaints, maintenance issues or disagreements over lease terms, is always present.

The Consequences of Missteps

 When it comes to disasters, the lack of a solid set of policies and procedures can result in injury, fatalities and greater property damage and related costs. A comprehensive disaster strategy reduces risk and protects lives.

Failure to comply with regulations can result in fines, legal action and potentially more turmoil. Unresolved resident disputes can generate negative reviews, which significantly affects the reputation of a community and harms an onsite team’s ability to generate quality leads. Financially, missteps can lead to legal fees, court settlements and increased insurance premiums, all of which quickly affect net operating income.

It is vital to recognize that the consequences of these missteps extend far beyond the immediate financial impact and can erode the long-term success of a portfolio. Fortunately, owners and operators can take proactive measures to reduce costly risks.

Proactive Measures for Potential Hurdles

 The worst mistake any organization can make is to not have any defined emergency plans in place. This is a recipe for disaster in any situation. Taking proactive measures to safeguard properties and protect residents is essential. This is accomplished by implementing a comprehensive risk-management strategy that can minimize the likelihood of encountering hurdles and mitigate the impact when they do arise:

  • Build a strong foundation of policies: One of the first steps is establishing a solid foundation of policies. These should outline clear guidelines for all activities in the community, including resident communication and team protocols. Well-documented policies set expectations for both residents and teams, reduce the potential for misunderstandings and ensure consistency throughout operations.
  • Ongoing training for teams and residents: Providing ongoing, regular training sessions helps make certain that everyone is aware of the latest regulations, best practices and procedures for addressing common challenges. By investing in professional development, teams are empowered to navigate hurdles and make informed decisions effectively. Property teams also need to continually train residents on disaster preparedness and the community’s plan for any incidents.
  • Easy access to policies and procedures: The potential for risk increases if teams find it difficult to locate the required information for any incident or issue they encounter. Policies and procedures should be available electronically and readily accessible from any device. This method also pushes updates company-wide, so associates don’t miss important changes.
  • Establish a chain of communication: When it comes to disasters, property managers need to be able to establish contact quickly and know who to contact. Creating a chain of communication saves valuable time and makes disaster management more effective. Make sure the established system is clear and all team members know their roles and responsibilities.
  • Support for compliance and mitigation: It is crucial to have support for compliance and risk mitigation efforts. Regular audits to assess adherence to policies, maintaining open lines of communication to address concerns promptly and partnering with legal and insurance professionals who specialize in multifamily, are helpful steps to boost compliance and assessment. It is also crucial to monitor on-property activity to identify and address potential issues before they escalate.

Strategies for Staying Ahead

 While multifamily challenges in the industry are inevitable, owners and operators can implement strategies to stay ahead of the game and overcome their effects:

  • Embrace technology: Using technology streamlines operations and enhances efficiency in managing policies, procedures and properties. Management software and services can automate many repetitive and high-risk tasks, which can mitigate errors and improve resident satisfaction. Digital communication tools facilitate effective outreach efforts, mitigating potential confusion.
  • Foster a culture of open communication: Encouraging open communication between associates and management, as well as residents and teams, is essential for identifying and addressing potential issues early on. Establish channels for residents to voice their concerns, whether it’s through online portals or regular meetings. Do the same for employees company-wide. Fostering a culture of open communication creates a supportive environment that minimizes the likelihood of conflicts escalating into major hurdles.
  • Stay informed and adapt: The regulatory landscape in the multifamily industry is constantly evolving. Stay informed about changes and adjust policies and procedures accordingly. Failure to comply with regulations can carry heavy financial penalties in some cases. After updates to policies, it’s important to follow up with teams to make sure they know and understand the changes.
  • Employ third-party services: Creating and updating policies and procedures, as well as the related training, can be a monumental task, and mistakes are possible for those unfamiliar with the process. Consider the use of an organization experienced in knowing the changes, crafting the needed policies and keeping employees informed.

By building a strong foundation of policies, providing ongoing training and seeking continued support for compliance and risk mitigation, owners and operators can stay ahead of the game and guard against risks. Embracing technology, fostering open communication and staying informed about industry changes are additional strategies to ensure long-term success. Even the smallest misstep can have significant consequences, so it is essential to prioritize risk management and take the necessary steps to safeguard operations.

About the Author

Gregory Lozinak is the senior vice-president of account management at Grace Hill, joining the team in 2023. Having spent most of his career as a senior operations executive, Greg has a strong track record in commercial and multifamily real estate investment management, delivering above-benchmark investment returns.

 Grace Hill provides industry-leading SaaS technology solutions designed to make a positive impact in real estate and improve the lives of people where they work and live. Harnessing years of real estate experience and the understanding that people are better together, Grace Hill helps owners and operators increase property performance, reduce operating risk and grow top talent.

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Green Retrofits for Cost Savings and Resiliency

By
By The Editors
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Funds can be used to offset project costs to the extent that a holistic green retrofit requires little to no investment from the owner
IRA and BIL funds can be used to offset project costs to the extent that a holistic green retrofit requires little to no investment from the owner.

Ryan Kristoff

The landscape for green technology is changing. Awareness of highly efficient electric heat pumps has been growing, and heat pump systems have now outsold gas furnaces for two years in a row. We’re witnessing new innovations in solar and storage. And government agencies continue to roll out funds—for weatherization, beneficial electrification, energy storage, etc.—from the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL). In addition to improving efficiency and cutting costs, these solutions can increase resilience and stability in the face of extreme temperatures and natural disasters.

IRA and BIL funds can be used to offset project costs to the extent that a holistic green retrofit requires little to no investment from the owner. Some of the new funding is already in circulation, but there is still an opportunity to influence the funds that have yet to be released because the administering agencies are still developing their plans and designing their programs. One consistent pain point for program administrators and service providers is coordinating various funding sources to effectively serve multifamily properties. While there is a great deal of potential and value in this activity, it has historically been hindered by barriers such as:

  • There are different requirements attached to various funding sources, which can be very burdensome for service providers attempting to coordinate funds while ensuring compliance.
  • Currently, there is insufficient collaboration within and between agencies, utility companies, etc. to improve the guidance that is available for leveraging multiple financial resources.
  • Financing institutions that can provide energy financing are too often overlooked partners in the design of projects and programs, even though their networks, existing project pipelines, and/or expertise can be crucial to project execution.

The multifamily community needs to push for increased collaboration, and for programs to leverage the expertise of multifamily specialists. For those that are unsure how to begin, ICAST has created a dedicated webpage that can serve as a starting point for advocacy efforts.

About the author:

Ryan Kristoff is the Vice President of Grant Programs at ICAST, a national nonprofit that designs holistic retrofit solutions for multifamily affordable housing (MFAH). He works with local government, utility, state, and federal partners to create and launch MFAH-focused clean energy programs.

Attracting Federal Investment to Multifamily Housing

Race Against Time: Seizing an Unprecedented Opportunity for Affordable Housing

Planning for Funding Opportunities Through the Inflation Reduction Act and Bipartisan Infrastructure Law

Accessing Solar for Multifamily Affordable Housing

Accessing Utah’s Home Energy Rebate Programs

SMI Property Management Merges with JPM Real Estate Services Willamette

By
By The Editors
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The valley-based SMI Property Management firm has expanded services to the Greater Portland area, according to a release.

The valley-based SMI Property Management firm has expanded services to the Greater Portland area, according to a release.

Portland-based JPM Real Estate Services has joined Willamette Valley-based, SMI Property Management.

“The friendly merger means that SMI will expand its industry-leading services into the greater Portland area, while maintaining all staff and properties served by JPM.

“We are excited about this new opportunity to provide property owners with our wide-range of management services and to help renters find fair-priced, accessible housing in the greater Portland area,” said Gabe Johansen, President and CEO of SMI Property Management. “We have served Salem and the Willamette Valley for 48 years and are honored to bring our customer-centered services to the diverse communities in greater Portland metro.”

“SMI is poised to expand its first-class level of client care to Portland and the surrounding communities in the first quarter of 2024. The merger brings more than 2,100 units into SMI’s management portfolio. SMI will now manage more than 5,400 multifamily units from Corvallis and Albany through Salem and Keizer up to Portland, Tigard, Beaverton, Gladstone, Canby, and communities in between. SMI also manages approximately 50 commercial office and retail properties in the mid-Willamette Valley.

“One of the keys to success to this growth strategy is adding JPM’s 60 relationship-focused professionals to the SMI team,” said Johansen. “For 20 years, JPM consistently met the needs of their clients by providing accountable and personalized service. I respect their customer-centered approach and am thrilled to have them join SMI,” according to the release.

With the merger with JPM Real Estate Services and their 60 employees, SMI Property Management will now provide jobs and benefits to approximately 160 employees. These jobs are a mix of highly trained portfolio managers, apartment community managers, and skilled maintenance teams.

“Throughout SMI’s 48-year history, it has provided a full-range of management services to property owners – tenant placement, property inspections, regular property maintenance, 24-hour emergency services, rent collection, marketing of vacancies, and financial reporting. SMI collaborates with property owners to prioritize fair pricing, accessibility and equity for current renters and business owners.

“For renters, SMI Property Management works with people who are seeking housing to find a home that matches their location, size, and budget requirements. Upon request, SMI managers collaborate with large employers, government housing authorities, and community services to identify appropriate housing,” according to the release

Visit SMI Property Management to learn more about SMI’s tenant-based and owner-based services or to see a list of vacancies and resources for renters.

The valley-based SMI Property Management firm has expanded services to the Greater Portland area, according to a release.

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Salt Lake City Rents Up Slightly In February

By
By The Editors
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The median rent in Salt Lake City rose by 0.3% over the course of February 2024, according to the March report from Apartment List.

The median rent in Salt Lake City rose by 0.3% over the course of February, according to the March report from Apartment List.

Currently, the overall median rent in the city stands at $1,324, roughly the same as last month. Prices remain down 1.1% year-over-year.

Rent growth in 2024 pacing similar last year

Two months into the year, rents in the city have risen 0.3%. This is a similar rate of growth compared to what the city was experiencing at this point last year: from January to February 2023 rents had increased 0.5%.

The median rent in Salt Lake City rose by 0.3% over the course of February 2024, according to the March report from Apartment List.

Rents are 11.2% lower in city than the metro-wide median

Across the metro area, the median rent is $1,491 meaning that the median price in Salt Lake City proper ($1,324) is 11.2% lower than the price across the metro as a whole. Metro-wide annual rent growth stands at -2.4%, below the rate of rent growth within just the city.

The table below shows the latest rent stats for 8 cities in the metro area that are included in our database. Among them, Draper is currently the most expensive, with a median rent of $1,887. Salt Lake City is the metro’s most affordable city, with a median rent of $1,324. The metro’s fastest annual rent growth is occurring in West Valley City (0.6%) while the slowest is in Murray (-5.1%).

The median rent in Salt Lake City rose by 0.3% over the course of February 2024, according to the March report from Apartment List.

Salt Lake City Rents Up In January

Salt Lake City Rents Dip In December

Rent Prices Up In February After Six Months Of Declines

By
John Triplett
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National rent prices finally moved up slightly in February after six months of declines, according to the March report from Apartment List.

National rent prices finally moved up slightly in February after six months of declines, according to the March report from Apartment List.

“This turnaround is in line with the rental market’s typical seasonal pattern, as we transition into the time of year when moving activity starts to gradually pick back up after bottoming out around the holidays,” the  Apartment List Research Team writes in the report.

Rent prices ticked up 0.2 percent in February and currently the nationwide median rent stands at $1,377.

Rent inflation is receding

The Apartment List report says the rental market slowdown in gradually showing up in inflation numbers and has been visible in their reports over the past few months.

While the apartment rental market has cooled and apartments are generally less expensive than a year ago, the national median rent is still more than $200 per month higher than it was just three years ago which has contributed to inflation numbers.

National rent prices finally moved up slightly in February after six months of declines, according to the March report from Apartment List.

The Wall Street Journal reports in an article that rent costs have been driving inflation numbers for months in official federal data. Prices in other areas may be responding to the Federal Reserve interest rate increases but rent costs are not.

“So, it’s been a bit of a mystery to economists why rent hasn’t followed suit. That’s especially because almost every data source, except the consumer price index kept by the Bureau of Labor Statistics, shows that those costs actually are cooling significantly — or even falling — since growth peaked early last year,” the Wall Street Journal reports.

Part of the problem with measuring rents and inflation the way the government tracks data is that a rental unit is only captured in the government surveys every six months, even if the rent changed during that period. The Bureau of Labor Statistics tracks rents for all tenants, not just those starting new leases — people staying put for a year or more might not see their costs change as rapidly.

But economists and others are not sure why the difference remains so pronounced month after month.

“We’re watching a big mountain of snow melt, and every 10 minutes, we look and there’s still a big pile of snow,” said Igor Popov, chief economist at Apartment List told the Washington Post. “We’re just watching it so carefully it doesn’t feel like we’re seeing much progress.”

National rent prices finally moved up slightly in February after six months of declines, according to the March report from Apartment List.

Vacancy continues rising

“On the supply side of the market, our national vacancy index continues trending up and stands today at 6.6 percent. And with this year expected to bring the most new apartment completions in decades, we expect that there will continue to be an abundance of vacant units on the market in the year ahead,” the report says.

National rent prices finally moved up slightly in February after six months of declines, according to the March report from Apartment List.

What Lies Ahead?

“Historical seasonal patterns suggest that rents will continue trending up for the coming months, but we expect future rent increases to be moderated by a robust construction pipeline delivering new units throughout the year.

“With consumer sentiment about broader macroeconomic conditions beginning to improve, it’s possible that rental demand will also rebound in the year ahead, but likely not to an extent that would outweigh the impact of all the coming supply,” the report says.

Read the full March report from Apartment List here.

Arizona Sues RealPage and Landlords For Price-Fixing

By
John Triplett
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Arizona Attorney General Kris Mayes has filed a lawsuit against RealPage, Inc. and nine major residential apartment landlords operating in Arizona for price-fixing and conspiring to illegally raise rents for hundreds of thousands of Arizona renters in the Phoenix and Tucson metro area
Arizona Attorney General Kris Mayes, above, sued RealPage and nine apartment landlords for price-fixing and conspiring to illegally raise rents.

Arizona Attorney General Kris Mayes has filed a lawsuit against RealPage, Inc. and nine major residential apartment landlords operating in Arizona for price-fixing and conspiring to illegally raise rents for hundreds of thousands of Arizona renters in the Phoenix and Tucson metro areas, according to a release.

RealPage is a software company that offers what it calls “revenue management” to its clients, including those named as its co-defendants in this lawsuit.

“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable-housing crisis,” Mayes said in the release.

“In the last two years, residential rents in Phoenix and Tucson have risen by at least 30% in large part because of this conspiracy that stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas,” Mayes said. “RealPage and its co-defendants must be held accountable for their role in the astronomical rent increases forced on Arizonans.”

RealPage used its revenue management algorithm to illegally set prices for all participants,” the Arizona Attorney General’s office told Azfamily.com. Specifically, the state alleges that the defendants “conspired to enrich themselves during a period when inflation was at historic highs and Arizona renters struggled to keep up with massive rent increases.”

Price-fixing training alleged

Mayes alleged RealPage provided training to the landlords and instructed them not to mention RealPage or pricing algorithms when explaining rent increases to tenants. Instead, she claims leasing companies were taught by RealPage to lie and to say that units were “individual” and “concessions” were built into the price. In reality, prices were set by RealPage in Phoenix and Tucson.

“RealPage and their co-conspirators concealed this illegal price-fixing scheme from potential renters,” Mayes said.

The attorney general also said RealPage used what they called “revenue management software,” where they compiled competitively sensitive data on unit pricing and occupancy provided by the nine defendant competitors.

“They were not competing at all. They were colluding with one another. Using this sensitive data,  RealPage directed the competitors which units to rent, when to rent them and at what price. This was not a fair market at work, this was a fixed market,” she said.

The attorney general’s lawsuit specifically alleges that:

  • The defendant landlords illegally colluded with RealPage to artificially raise rents and concealed their conspiracy from the public. By providing highly detailed, sensitive, non-public leasing data with RealPage, the defendant landlords departed from normal competitive behavior and engaged in a price-fixing conspiracy. RealPage then used its revenue management algorithm to illegally set prices for all participants.
  • RealPage’s conspiracy with the landlord co-defendants violates both the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud Act. Arizona’s antitrust law prohibits conspiracies in restraint of trade and attempts to establish monopolies to control or fix prices. The State’s consumer-fraud statute makes it unlawful for companies to engage in deceptive or unfair acts or practices or to conceal or suppress material facts in connection with a sale, in this case apartment leases.
  • The illegal practices of the defendants led to artificially inflated rental prices and caused Phoenix and Tucson-area residents to pay millions of dollars more in rent.  Defendants conspired to enrich themselves during a period when inflation was at historic highs and Arizona renters struggled to keep up with massive rent increases.

The landlords named in the lawsuit are: Apartment Management Consultants, L.L.C., Avenue5 Residential, L.L.C., BH Management Services, L.L.C., Camden Property Trust, Crow Holdings, L.P./Trammell Crow Residential, Greystar Management Services, L.P., HSL Properties, Inc., RPM Living, L.L.C., and Weidner Property Management, L.L.C.

One of the companies named in the lawsuit, Apartment Management Consultants, is denying these claims. They say of the 85 properties they own in Arizona, only one uses the software, according to Azfamily.com.

State officials say such pricing methods violate the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud Act. The law states that entities cannot establish monopolies to control or fix prices. In 2023, ProPublica revealed that the RealPage software used algorithms to maximize profits, which experts stated could violate antitrust laws.

After the ProPublica report the  Department of Justice filed a statement in support of tenants. “Algorithms are the new frontier,” federal prosecutors said in their filing. “And, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anticompetitive threat than the last.”

RealPage has said it “strongly denies the allegations and will vigorously defend against the lawsuit.”

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FCC Proposes Ban on Exclusive Broadband Deals in Apartments

By
John Triplett
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The Federal Communications Commission is proposing to ban exclusive apartment broadband deals which force tenants to use only one provider
The FCC proposes a ban on exclusive broadband apartment deals to give consumers and opportunity to choose a broadband provider.

The Federal Communications Commission (FCC) is proposing a plan to ban exclusive broadband deals in apartments and eliminate arrangements imposed on tenants that force them to stick to a specific broadband service provider, according to a release.

FCC Chairwoman Jessica Rosenworcel said tenants in apartments, condos, public housing and other multi-tenant buildings are too often “forced to pay high prices with limited choices for internet or other services.”

The proposal would seek to eliminate “bulk-billing” arrangements imposed on tenants that impose a specific broadband service provider for their household.

Proposal To Ban Exclusive Apartment Broadband Deals

Specifically, the Notice of Proposed Rulemaking would propose banning bulk-billing arrangements by which tenants are required to pay for broadband, cable, and satellite service provided by a specific communications provider, even if they do not wish to take the service or would prefer to use another provider.

It proposes allowing tenants to opt out of bulk-billing arrangements.  The proposal would also increase competition for communications service in these buildings by making it more profitable for competitive providers to deploy service in buildings where it is currently too expensive to serve consumers because tenants are required to take a certain provider’s service.

The FCC would also seek comment on other practices that may limit consumer choice in multi-unit buildings.

“Everyone deserves to have a choice of broadband provider,” Rosenworcel said in the release. “That is why it is not right when your building or apartment complex chooses that service for you, saddling you with unwanted costs, and preventing you from signing up for the plan and provider you really want.  This proposal shuts down these practices.  It boosts competition and consumer choice and builds on our ongoing efforts to improve broadband transparency.”

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