Why is Seattle’s rent so high? Justice Department investigates possible price fixing

Following reports of alleged price fixing in the rental market, including in Western Washington, the U.S. Department of Justice is opening a criminal investigation into a third-party service used by large, corporate landlords.

The alleged scheme involves a company called RealPage, which sucks up proprietary data from landlords and spits out pricing recommendations. The service has also caught the attention of Western Washington leaders.

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King County Councilmember Teresa Mosqueda is familiar with how technology can increase rents. When she was on the Seattle City Council, she helped shut down another tech company that operated like “Ebay for renters.”

“We heard a lot about this in the University District where prospective renters were going to apply for a rental unit online, and in real time, they would see the rental asking price scale up in front of their eyes, like Ebay," she said.

Moratoriums on that technology, including one in Seattle, appeared to have been effective. That company is no longer in business. The use of a different third-party technology to set rental prices is at the center of the DOJ's investigation.

The DOJ probe will look at a company called RealPage, which allegedly uses an algorithm to turn landlords' private data into recommendations on how high to set rent, which are then shared with all subscribers to its market analytics service.

If true, it could mean that multiple landlords are colluding on rental prices, though that collusion is hidden under the hood of RealPage's technology.

King County Councilmember Mosqueda says that in the Seattle area, RealPage's algorithm drives up rents more than they normally would rise just based on market demand.

“This is another emerging trend that we’re seeing across the county," she told KUOW. "I think that we are scrambling like other jurisdictions to catch up, but we need to act quickly to ensure that this type of technology isn’t leaving working families out and lower wage renters.”

Now, as a county-level lawmaker, Mosqueda wants to learn more about the new allegations against RealPage, and once they’re understood, she hopes to work with other jurisdictions to help shut down any potential collusion that’s happening, just like with "Ebay for renters."

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Mosqueda said King County's role could help protect renters who've been displaced to unincorporated parts of the county due to high prices in cities. But she acknowledged the county may not be the most important place to regulate the industry.

She applauded state attorneys general that are investigating or suing corporate landlords and RealPage. Washington state's Attorney General's Office has not yet filed a lawsuit.

Clarification: The technology that King County Councilmember Teresa Mosqueda mentions is different than the algorithm RealPage uses that is at the center of the new DOJ investigation. Both relate to technology being used to set rent prices.