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An algorithm may be to blame for the rise in rent

A for rent sign in front of a cottage in San Diego, Ca., Oct. 30, 2018.
KPBS Staff
A for rent sign in front of a cottage in San Diego, Ca., Oct. 30, 2018.

A rent-pricing software used by some of the nation's biggest property managers may have been aiding the steady rise in rent prices across the country in recent years.

YieldStar, an algorithm developed by Texas-based tech firm RealPage, helps landlords set prices for their listings — often higher than the market rate.

The top ten largest property managers in the country utilize the software, including Greystar, which has listings in San Diego.


Heather Vogell, a reporter at ProPublica who is currently investigating the rental housing market, published an investigation into RealPage in October.

"Experts say RealPage and its clients invite scrutiny from antitrust enforcers for several reasons, including their use of private data on what competitors charge in rent. In particular, RealPage’s creation of work groups that meet privately and include landlords who are otherwise rivals could be a red flag of potential collusion," she wrote. "At a minimum, critics said the software’s algorithm may be artificially inflating rents and stifling competition.

Shortly after publishing her investigation, a group of renters — including a San Diego resident — filed a class action lawsuit in U.S. District Court in San Diego against a number of the nation's property managers. The suit said that by using RealPage's YieldStar algorithm, these property groups formed a cartel "to artificially inflate the prices of multi-family residential real estate in the United States above competitive levels" in violation of federal law.

Vogell joined Midday Edition on Wednesday with more.