$1,950 Average Monthly Rent Sparks Legal Battle Against ‘Housing Cartels’

At a time when the American Dream seems increasingly out of reach for many, the housing market has become a battleground of affordability versus profitability. With average rents soaring over $1,950 monthly across the United States ¹, finding affordable housing is more acute than ever.

This crisis is not uniform; while rents are falling in the West and South, they continue to rise in the Midwest and Northeast, pushing the boundaries of what many Americans can afford.

But what’s driving these changes, and who stands to benefit?

The Rising Tide of Rent

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Imagine moving into a home with a rent of around $4,000, only to witness it soar to over $6,700 in just a few years. This isn’t a hypothetical scenario for many; it’s a distressing reality.

Such drastic rent hikes are tantamount to eviction notices, pushing residents toward the brink of displacement. The National Multifamily Housing Council (NMHC) underscores the situation’s urgency, stating the U.S. must construct 4.3 million new apartment homes by 2035 to satisfy the burgeoning demand for rental housing.1

This necessity stems partly from a deficit left by underbuilding post the 2008 financial crisis. The lack of adequate housing supply has significantly reduced affordable housing units, with a 4.7 million decrease in apartments renting for less than $1,000 from 2015 to 2020. 

Without a substantial increase in housing construction, landlords’ ability to dictate prices will likely intensify, further aggravating the affordability crisis and leaving more Americans struggling to find affordable homes.

Legal Battle Against ‘Housing Cartels’

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At the heart of the controversy is a group of large landlords dubbed ‘Housing Cartels ³‘ and their alleged collusion with RealPage, a major provider of property management software. Accusations of facilitating a housing cartel have led to lawsuits, with claims that RealPage’s software recommendations have led to inflated rents.2

The District of Columbia’s attorney general has brought a lawsuit covering over 50,000 apartment units, alleging that rents have been artificially high for years. This legal battle raises critical questions about the future of housing affordability and the role of technology in setting rental prices.

Technology’s Role in Rental Pricing

Property managers’ adoption of pricing software has revolutionized how rents are set, removing human empathy from the equation and relying on algorithms to dictate prices. This shift towards technology-driven pricing strategies has been defended on efficiency and revenue maximization.

However, the impersonal nature of these systems has sparked a debate about the ethical implications of using algorithms to determine how much people pay for their homes.

The Impact on Tenants

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The consequences of these pricing strategies are felt most acutely by tenants, who find themselves at the mercy of an increasingly impersonal and unaffordable housing market.

Stories of significant rent hikes and the subsequent displacement of long-term residents highlight the human cost of the housing affordability crisis ². The reliance on pricing software has made the rental market more stressful and led to accusations of market manipulation.

Legal & Ethical Quandaries

The lawsuits against RealPage and the landlords using its software have brought to light the complex legal and ethical issues surrounding the use of technology in the housing market. These cases question whether the conduct of RealPage and its clients violates antitrust laws or collusion.

The outcomes of these legal battles could have far-reaching implications for how rental prices are set and regulated in the future.

The Future of Housing Affordability

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As the legal proceedings unfold, housing affordability in the United States hangs in the balance. With the demand for affordable housing continuing to outpace supply, the need for a balanced approach to rental pricing has never been more critical.

The rising cost of renting in America is a multifaceted issue encompassing legal, technological, and ethical dimensions. As the nation grapples with this affordability crisis, the outcomes of ongoing legal battles and the actions of policymakers will play a crucial role in shaping the housing market’s future.

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Sources:
  1. nmhc.org/news/press-release/2022/u.s.-needs-4.3m-more-apartments-by-2035-to-address-demand-deficit-and-affordability/
  2. propublica.org/article/doj-backs-tenants-price-fixing-case-big-landlords-real-estate-tech
Martha A. Lavallie
Martha A. Lavallie
Author & Editor | + posts

Martha is a journalist with close to a decade of experience in uncovering and reporting on the most compelling stories of our time. Passionate about staying ahead of the curve, she specializes in shedding light on trending topics and captivating global narratives. Her insightful articles have garnered acclaim, making her a trusted voice in today's dynamic media landscape.