The Real Reason Everyone’s Rent is Up 22 Percent

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In case you’ve noticed, your rent has likely increased by over 22 percent, and like everyone else, you’re asking why. The reason is wilder than you may think, and it stretches beyond inflation or a “housing shortage.”Because of one company you probably haven’t ever heard of, landlords pull hard-to-rent apartments off the market instead of lowering the price. This has created an artificial shortage in the housing market and higher rent across all rental companies.

How Real Page Cornered Housing

Owned by the private equity firm Thoma Bravo, Real Page, Inc. bills itself as a software company specialized in property management. Its software has an 80 percent share in the commercial revenue management software market. This is a huge business, and some of the company’s business practices have raised eyebrows.

On August 23, 2024, the US Attorney General joined the DOJ and seven states in a lawsuit to accuse RealPage of enabling landlords to conspire to inflate rent prices. Primarily, critics point to RealPage’s infamous AI Revenue Management (AIRM) tool which came after its well-known YieldStar and LRO products.

AIRM is an algorithm that uses dynamic pricing based on various factors, including market dynamics and competitor data. From there, it suggests to the landlord or property manager the optimum price at which to rent a unit. Although it sounds benign, it is more controversial than it sounds, since critics argue RealPage pressures their clients to accept their recommendations.

When property management companies receive a rental price suggestion, many times it is accepted automatically by the user’s preset preference. Other times, a human has to accept it or not. That human is usually a property manager, a small part of the company answering to a higher-up.

In the instance a property manager doesn’t accept the rent rate suggestion, RealPage escalates to a direct supervisor of the person or the company’s headquarters. This potential escalation puts extreme pressure on the human to accept recommendation of the algorithm. Because RealPage has an 80 percent share in the commercial revenue management software market, it has a massive ability to shape the housing market through pricing.

Normally, a landlord would lower the rent on a property they’ve been unsuccessfully trying to rent for over half a year. This reduction in price is the reality of the market. But RealPage tells the landlord to remove the apartment from the market.

By removing the apartment from the market, the landlord has made one less unit available to the public. This creates a fake sense of a housing shortage, and it makes the market less competitive for landlords.

The “shortage” acts as justification for continuing to raise rent, even in bad markets. So, in essence, you pay more in rent in part due to apartments intentionally being kept empty to maintain high rent rates.

The Takeaway

Rent prices are steadily rising, and RealPage is accused of being instrumental in that. Using its proprietary AI Revenue Management tool (AIRM), it tells landlords what to rent their properties for. When a property goes unrented for too long, this AI tool convinces the landlord to take the property off the market. Doing so reduces competition for landlords, while inflating rent prices for tenants. This is why your rent is up 22 percent and climbing.

FOLLOW the author Jermaine Reed, MFA on X @Jermaine Reed, MFA for his controversial but real hot takes.