[CNBC]米国住宅所有者協会の権力と課題：住民と経済に迫る影響

In the U.S., the typical home in an HOA pays between
200 and $300 per month in fees. They act as hyper local governments and in many ways
supersede all the other laws that exist. When you sign into a covenant that runs with
the land. Home insurance companies are saying homes are too risky
to insure. Losses are increasing related to climate risks. As that risk increases, so does the cost of insuring
those assets that people have on hand. A group of large landlords is now being sued for their
approach to business. Realpage is facilitating a housing cartel. There's not enough housing in the US, so guys like us
that own 80,000 well-located apartments, we're still in a pretty good spot. The software takes empathy out of the equation. 84% of newly built single family homes sold in 2022
belonged to what's called a homeowners association, which are organizations that
oversee properties in a community. Certain local governments require almost all new
construction to have an HOA. They're rooted in the desire for municipalities to
offload their responsibilities, for taking care of things that you would normally associate with paying
your taxes. Homeowners associations provide value to owners. But there's been a backlash to Hoa's because of some
homeowners negative experiences. When I first bought this house, I was very excited. It seemed like it was a very nice, cozy, close knit
community. Then it started turning into a horror story. I'm a huge believer that, you know, you do sign away
your civil rights when you're signing into an HOA or a condo association? It's a matter of personal preference. Some people like anchovies on their pizza and some
don't. Some people really like living in homeowners
associations. Others don't like it. So why are HOAs so powerful and do they make homes more
valuable? Homeowners associations are run by a board of
directors that's made up of volunteers who own property in the community. The HOA typically handles communal
responsibilities, which can vary from managing amenities such as swimming pools to making sure
property owners follow home maintenance rules. The board may hire a management company, which tend to
be for profit, to help run the day to day operations. Homeowners in the community pay into a fund for the
HOA to have an operating budget. In the U.S., the typical home in an HOA pays between
200 and $300 per month in fees. HOAs have the authority to hand out fines to residents
in the community that the association feels is not following the rules. Those fines may also accrue interest in some cases. The industry's annual dues for their HOA in Newnan,
Georgia is $200 per year, which is lower than the national average. So on paper, their HOA membership doesn't seem like
that much of a financial burden. But that's not been their reality. When we moved in in 2008, we found out that there was a
balance that was attached to the home because it had been sitting in the community
and they were fining us for that balance and late fees and any other type of fines that
they would put onto the home for lawn care or anything. All of that was attached to this home when we moved
in. From 2008 to 2014, we tried to get in contact with the
HOA and we never had a reply from them and we just kept trying and no answer. By August 2015, the HOA put a lien on the Inostroza
home. In the court documents, the HOA said the Inostrozas
owed more than $1,600. A lien is when a party has a legal claim to an asset,
such as a home, which can serve as collateral to satisfy unpaid debt. This can open the door to the HOA, escalating to the
next level of debt collection, such as foreclosing on the home or, in the Astros case, garnishing wages. In mid 2015, they started garnishing my wages. The first time I learned of that was when I got my
first paycheck that they garnished. I didn't get any prior notice. I got a notice two weeks after. Even though the HOA was collecting from Jules paycheck,
invoices filed with the court showed they were adding fines rather than deducting from the overall balance
by December 2016. The HOA said the Inostroza owed more than $4,300 in
2016. I decided to go into debtors court. My attorney and the Hoa's attorney came to an
agreement that I would pay $3,200. We paid in installments, and we finally paid
that off in January of this year. But it seemed like never got to the management or
homeowner situation, just adding fines and adding interest. That's all that was doing. So they were still saying that I owed almost $8,000,
while my attorney and their attorney agreed on 3000 something. The Inostrozas estimate that they've paid about $12,000
in fines and garnished wages to the HOA, along with thousands of dollars in legal fees to their own
attorneys. The latest invoice they received on August 18th, 2023,
says they still hold a balance. Even after paying $12,000. They're still saying that we owe them $8000 after. The past, with 23 after the past ten years. Ten? Yeah, about ten years, yeah. Cnbc reached out to Homeowners Management LLC for
comment and received automated responses directing us to contact the current management company as of August
2023. A representative from the current management company,
Century Management, told CNBC, because it just became the management company for this community in the last
couple of months, Century has little ability to comment on historical facts regarding the Inestroza case. The former director of the HOA board, who oversaw the
association from 2020 until her resignation in October 2023, declined CNBC's request for comment. The attorneys representing the HOA board did not
respond to CNBC's repeated requests for comment. Jessica Navas and Matt Bozzone, who are also
homeowners in the subdivision, began investigating their HOA. I started to have this feeling that there was something
odd about the HOA during the pandemic. They discovered a history of at least 25 foreclosures
in the community over the past 15 years. Just one house can have a record between 2 to 3
foreclosures within that time frame. Jessica hadn't just took the initiative to go to
everyone in the community that she knew were homeowners. We never would have known any of this because all we
did was basically go to work, come home, raise our children, that's it. And we never knew that anybody else was going through
this, because for the longest I felt like, is it just me? I feel like it could be a positive thing when the
community work together, keeping our houses looking good and good for property value. A big part of an HOA sales pitch is that the presence
of the organization can help increase property values. The board is responsible for protecting property values
for most people in the United States, the single biggest investment they're ever going to make. There's mixed evidence about whether this is true. A 2019 study found that on average, HOA homes cost at
least 4% more than non HOA homes. That comes out to an extra $13,500, but those property
values can vary significantly by location. A different 2019 analysis of three US cities
found that the home values in HOA areas were less than those in neighborhoods. Without them, the Inestroza property value has
increased between the time they bought it in 2008, following the housing crash to 2023. I don't think that HOA has anything to do with our
property value going up. I feel with the HOA, the management company don't
increase the property value. They're just there as employees, the community that
increase the value of the property. Hoas can also be necessary in order to manage shared
amenities or land, which can be a value add for homeowners. There are associations out there that handle all the
landscaping. Even though you may own your lot. The association cuts the grass and they do all the
landscaping. So is that a cost saving? Sure, management companies can help a community
function smoothly, especially when a board of volunteers needs assistance. One large company will will manage 20 or 30 or 40 hoa's
in a region, and they tend to have it down to a science. They know how to deal with trash pickup. They know how to deal with yard maintenance. They know how to deal with complaints. They have their fines and their enforcement down to a
science. Relying too much on a property management company is
going to cause problems, and relying too much on the homeowners to run their own association is also going
to cause problems. The management company and the manager are simply a
contractor to carry out the board's direction. They may handle all of that routine activity on behalf
of the board, but those folks who live in the community and volunteer remain
the decision making authority. The board in that situation is still responsible. They are still the fiduciary they are legally and
financially responsible for the for the decision making in that community. I think that there are times and places for HOAs, and I
think that they could be positive, but the abuse negates that benefit. A lot of people have trouble thinking of community
associations as a business, even though statutorily in many cases, they they are. You have to think about it like running a business. At the same time, you have to think about it from the
perspective of a group of investors who all have this shared goal of making sure their
investments safe, and nobody's quite sure how to do that. And when you bring in an outside advisor to help
run your organization, those people's goals are not the same as the goals of the people who
made the initial investment. Professional involvement in Hoa's is increasing, with
the for profit homeowner association industry growing to $38 billion. Jessica and Matt have been fighting for more
transparency about where their HOA fines are going. We had four months of pulling teeth. We wanted a general ledger, but they gave us a balance
sheet and a budget. We contracted a forensic audit or CPA. It is very concerning to see that the amount of income
that they are receiving is coming from this particular aspect. Fine citations, collection, legal fees and her
recommendation was to remove the board, freeze the account, get access into the bank account. The numbers don't align with each other. In most cases, it's association management companies
charge a flat fee for their management services for the association each month. They're not getting a share of the proceeds. That's not how they're compensated. We didn't have a management company. We wouldn't have to be dealing with these different
problems that we're having. Basically, they're just milking the community. The Inostroza's experience with their HOA highlights
some patterns seen across the country when it comes to how much power HOAs have. 57% of homeowners polled disliked living in an HOA,
with more than 3 in 10 homeowners saying they feel like the HOA has too much power. People need to understand how much power a board of
directors has. Governments are giving the power of the municipality
to these communities. They act as hyper local governments and in many ways
supersede all the other laws that exist. When you sign into a covenant that runs with
the land. Covenants is shorthand for covenants, conditions and
restrictions, or ccnr's. These are documents that outline the HOA board and
homeowner's rights and obligations. A homeowner's association usually enacts the ccnr's,
as well as the bylaws that outline procedural matters when it's incorporated by the subdivision developer. The board in the beginning is controlled by the
developer, so it starts out as a board of people that are paid on behalf of the developer to operate that
community, and it transitions 100% of the time. In some cases, it takes years. In other cases, it might only take 1 or 2 years to a
set of volunteers. Homeowners who have disputes with their HOA say they
have trouble getting help from official government channels. I have personally contacted the city officials. None of them want to get involved in the HOA. There are only seven states that have an office of HOA
Ombudsman Colorado, Delaware, South Carolina, Florida, Illinois, Nevada,
and Virginia. However, the Ombudsman office is usually not very well
funded, and they have limited jurisdiction over the types of
complaints they can take, and in some cases, that's all the Ombudsman office can do is
take your complaint. They can't even take an active role in investigating
or resolving the complaint. As far as the regulation goes, I think a lot of that
regulation is predetermined. So in other words, there's already laws that are set
up in place. And so inherently they're already being regulated that
way. And of course you've got the court systems for checks
and balances in case you have a disagreement within your your homeowners association. I think that education is really key, um, to these
communities. I mean, they need to know that there's nobody that's
going to help them, that in a lot of cases, civil court is the only answer. So you can't even take these some of these communities
to small claims court. There's really a very limited number of scenarios where
a court can say that something that's binding in your covenants is not valid. Lawmakers in several states, such as Texas, North
Carolina and Florida have introduced policies to address some of the issues homeowners have been
raising, but it's been met with backlash from the professional management industry. There's always going to be a wide variety of
perspectives and concerns. So no solution, no bill, no piece of advocacy is ever
going to garner 100% support from everyone. We try to find the best middle ground that makes sure
the association runs effectively and and people's investments are protected. As of right now, change has to happen at the
grassroots level, with homeowners fighting through the court system as well as through voting for a board
they feel represents them. Matt was elected president of the board in October
2023. So these are your new officers. Thank you very much. I did the oath when I became a
naturalized U.S. citizen. It was my duty and regardless of my
economical condition, I have to fight for them. I would feel bad, you know, selling this home to
someone else, especially if they don't know what's been going on in the neighborhood. And I feel like I would probably just be like, hey,
look, I don't think you want to move in this neighborhood. You may want to think about it. I love this house. It was our dream house from the beginning, even
thought. It was over our heads. But we just worked really hard and made it become our
own. And I love it. I have my horses here. I have a 100 pound tortoise that I saved. So yeah, I just love it. It couldn't be more perfect
for us. But Allstate, who insured Darlene's house for 18 years,
recently sent her a non-renewal notice. You can't just say after 18 years of being okay today,
you're not okay. And that's it. Home insurance companies are saying homes like
Darlene's are too risky to insure. The nation's largest homeowner's insurance company,
State Farm, has decided they won't accept new applications for property in California. Household names like State Farm, Allstate pulling out
of these markets, they know the risk is just too high to be actuarially sound for their business. There are companies saying there are too many buildings
being destroyed by catastrophes. Inflation is making it too expensive to rebuild, and
they can't protect their investments any longer. Losses are increasing related to climate risk. As that risk increases, so does the cost of insuring
those assets that people have on hand. But without homeowners insurance, many homeowners can
find themselves in big financial trouble. I've been trying to find another insurance because I
had one company step up and said they'd do it for 12,000 a year. I go from 2000 to 12,000. Yeah, we would have to move. There's no way. But selling the home might not even be possible. The moment that an individual gets a non-renewal letter
from the private insurance market, they essentially lose 12% of their property value. It's not just California. Louisiana and Florida are contending with similar
issues due to flood risk. Why are so many American houses becoming uninsurable,
and what will it mean for the economy when so many homes lose some of their value? Darleen bought her house for $420,000 at the behest of
one of her best friends. My girlfriend that I've known for close to 40 years. She's the one that brought me to this. She lives two doors down and she said, you have to buy
this house. So I had really no choice. But it was the best thing we ever did. It's just three bedroom, two bath, and it's only
probably 1700 square feet. You know, it's just perfect. You know, I'm a outside person anyway. So what's the most perfect is the outside. I have a huge pasture for the horses and the backyard
had an artist come and she painted all my animals on my back fence. So when I go sit in my little girl area where we have
a little glass of wine, all my animals, even the ones I've lost, are all painted on the side of the barn. It's just beautiful. Darlene and her husband still owe about $360,000 on
their mortgage. Most mortgage lenders require home insurance as a
prerequisite for the loan, and 58% of Americans hold mortgages on their homes. You are allowed to live in your home without insurance. That would be called self-insurance. It depends on your financial situation, whether or not
that is a good or risky choice. Insurance acts as a risk transfer tool. So in order to make sure that that investment that the
bank is making with you, should something happen, a catastrophe of natural catastrophe or man
made catastrophe, if it happens, the insurance allows the home to recover. The insurance business model works like this. Companies assess the risk of damage happening to a
home and collect a premium accordingly. By insuring properties with varying levels of risk,
they are able to spread the liability for the riskiest assets among the whole group. They reserve some funds to pay out claims and invest
others. They typically make their profits via safely held
investments. The insurance rate is a reflection of the risk. Insurance rates are the effect of the risk, not the
cause. So the insurance company, in order to operate its
business as it should in a profitable manner, needs to do what it can to get those insurance rates
to better reflect the risk. Now, insurers are saying climate change, inflation and
the regulatory environment have created a situation where it's difficult to operate a profitable business
in some locations across the country. Private insurance companies are withdrawing insurance
in high risk areas due to climate risk, and people are seeing their premiums increase in the
public market. Every state has seen an increase, but 12 states have
seen their average premiums more than double. The insurance is regulated at the state level. Some researchers refer to aspects of the regulation as
premium suppression, which may result in climate risk not being fully priced into the market. For example, look at prop 103. Proposition 103, in the state of California was
something that was passed all the way back in the 80s in. California, due to the regulatory policies, essentially
don't allow climate to be included in the calculation of insurance premiums, but they
also set a limit on what the increase can be year over year. So the current limit is about 7%. Anything is 7% or higher. Has to go in front of the insurance commissioner. It has to be approved in front of the board. That can take a long time. If they can't charge the adequate rate for the
insurance, it just simply doesn't make sense to do business there. Which leaves people like Darlene with non-renewal
notices and the remainder of their mortgage debt in their hands. Individual homeowners have a few options
if traditional homeowner's insurance becomes unavailable. If you receive a non-renewal notice, there are always
options to have more insurance. Depending on where you live, you can go into residual
markets. Excess markets these markets will have a higher cost
to the insurance. The rates are not at regulatory approved like the
standard market would be. However, it is an option. I've been trying to find another insurance. No one will even step up to the plate. I had one company step up and said they'd do it for
12,000 a year. I go from 2000 to 12,000. Yeah, we would have to move. There's no way we're retired. Some states also have government assisted insurance
options as well. A social welfare program, if you will. 32 states and Washington, D.C. have created insurers of last resort. The state fair program in California that is the state
run insurer of last resort for properties that have extreme wildfire risk,
cannot get insurance in the private insurance market. Darlene's insurance agent told her that the fair plan
would be very expensive. In her case. The guy that was my guy for 18 years said that he
won't even he won't even recommend or quote with the fair plan because he said it's unfair. Plan 12,000 is not really a fair plan in my estimation
either, because he was quoting even the deductibles. Even on the 12,000 a year, the
deductibles were like 15 grand. If this happens, I'm like, well, what's the point of
that? In the case of California, just for example, the
average cost of a state fair plan premium is about $3,200. Quite honestly, government does not do insurance well,
and even more so it extends the burden to the taxpayer or it puts it back on the insurers who are
operating in the individual states. Carlene's insurance agent said that any wildfire
protection tactics that she tries to do won't impact the insurers decision not to renew her coverage. On paper, they said, I'm in a fire area and we have a
wooden fence that's connected to the house that has been
connected to the house forever, and they said, that's a, you know, so they they did notice note some things
like that. So that's why I called and said, well if I just we'll
just change the fence out. You know, I, I just paid like $7,000 to have trees
trimmed. If they need to be trimmed more, I could do that. I mean, what can I do? And he absolutely said there's nothing I can do. Meanwhile, climate change keeps getting worse. When I first moved up here 18 years ago, we certainly
didn't have the fires that we had. We didn't have any fires this last summer. It was wonderful. But I mean, the smoke came in pretty
bad there for 2 to 3 years, I guess, and that was like upsetting me. Since 2009, there has been a 270% increase in the cost
of wildfires and a 335% increase in the number of structures destroyed by
wildfires. And for every additional building destroyed, there is
an associated 1.9 additional non-renewal notices issued from an insurance company. Florida is a state where the largest insurance company
in the entire state now is the state run Citizens Insurance Agency. So today the the most at risk properties are on that
insurer of last resort, and it's become the largest insurer of the state, which is
crazy to think about. All of the risks that exist in the state is on one
single insurance company's role. And if there were to be some issue with that now the
state has to step in. Communities may need to rethink how they use insurance
to account for climate risk. If you look at some other states who are beginning to
look at ways that they can take a more collective and communal approach to risk management, you're seeing
very different circumstances. I think the state of Alabama is a very good example of
a state where the government and policymakers have embraced the understanding of what is causing
this increased risk, how can we help manage better, manage that risk? And they're allowing consumers to to take grants up to
$40,000 for a government grant to make yourselves more resilient. And we really need to think about the behaviors in
terms of where we're developing, how we're living, so that as a community, we can make it more resilient. But in the meantime, all of this is going to have big
implications for the US real estate market and therefore the US economy. The insurance mechanism is the first to really price in
climate. How would I even sell my house if I can't get
insurance? This house, the next person going to, you know,
they're not going to want you know, they can't buy a house if they can't get insurance. And I guess unless they're coming in cash. But the insurance sector was 2.6% of US GDP in 2022. Housing in general accounts for around 15 to 18% of
the US GDP. As the insurance market starts to price in climate
risk, a good portion of the US economy will be impacted. So you need insurance to have economic growth. So hopefully we're beginning to see the policymaking
community in the state of California understand that some changes need to take place. Insurers need to be able to charge for risks like
inflation, for risks like increased climate with a population, an economy the size of
California, the insurance industry wants to be there. You know, as much as the customers are frustrated
about their costs of insurance, insurers are frustrated that they can't do business there anymore. So what we would argue is if we can get the regulation
in a better place, that better reflects the risk in that state. Insurers will be back and wanting to do
business. Their communities need accurate data to understand
where the risk exists, understand what their most vulnerable not necessarily populations, but assets are
in the community. What the most vulnerable parts of their areas are,
where they can efficiently allocate resources to protect and suppress the risks that exist in those
areas. What the insurance industry would also like to see is
more emphasis on physical infrastructure resilience, because if we understand that climate risk is
increasing and we're living in places that have increased climate risk, we've got to find ways to live
in a more resilient manner, and the government can help incentivize that. The tax system, for example, is a great
incentivization tool. But also we've seen of late some investments taking
place. Insurance companies say they have been trying to
adequately price in climate risk for years. The insurance companies absolutely have their own
underlying models and maps that give them the ability to understand which areas are most at risk, versus
which areas are less at risk. When we produced our model, we correlated it with the
data that comes out of the fair plan, that comes out of the citizen plan in Florida and Louisiana. And what we ended up finding were really high
correlations between our extreme wildfire risk, wind risk and flood risk and the the either the
Non-renewals or the increases in premiums on those plans across those states. Insurance experts say rethinking how we account for
climate risk is also key to keeping communities safe. Risk management does not come into play until it's
entirely too late. When it comes to individual personal property
purchasing, it comes into play when the mortgage provider needs you to go get it. And that's the first time when a consumer even begins
to think about where they're living and what risks might be. The cost reflects that risk. That should be, you know, an alarm to tell them that
they're living in a risky place and then ask themselves, how could I reduce that risk? Or do I need to think about living somewhere else? Like many Americans, Darlene said when she purchased
the house fire. Now it wasn't even a thought. That's true. But now she's struggling. Even though she feels she did everything right. We're doing the right thing. We're doing everything we can. We retire. You know, we worked hard, we retired. We got our. We take good care of our house. I, I'm never late on my bills. I've paid that for 18 years. I've never you know, we never missed making everything
right and paying everything. And you just give me no choice. That's the part that bugged me the most, I think, is
give me a list. Give me something to work with. Raise it if you need to. You know the price reasonably. But don't just give me no choice. That's not right. The average rent in the United States, across all forms
of housing, is over $1,950 a month. Prices are falling in the west and south, but still
rising in the Midwest and Northeast. When we moved here, it was around 4000. In 2023, it's over $6,700. We were going. To get a 23% increase, which we felt was like an
eviction notice. It was an eviction notice. Experts say the U.S. needs to build over 4 million new apartment homes by
2035 to keep pace with demand. Otherwise, the pricing power of landlords may grow. There's not enough housing in the US, so guys like us
that own 80,000 well-located apartments, we're still in a pretty good spot. A group of large landlords is now being sued for their
approach to business. The lawsuits focus on their agreements with RealPage,
a major provider of property management software. Effectively, RealPage is facilitating a housing cartel. If that's true, will landlords owe their tenants money
and what will that mean for the future of home rental prices in the United States? The lawsuit, brought by the D.C. attorney general covers over 50,000 apartment units in
the district, which were allegedly charged inflated rents for years. In the District of Columbia. We're confronting, like many communities, and
affordability challenge in housing. Our housing supply doesn't keep up with the demand. So as a result, we have ever increasing pressure on
pricing and rents are already high. But what's of significance for the District of
Columbia is the concentration of multifamily units, particularly in large apartment buildings with more
than 50 units in them. For For example, see the portfolio of Besuto. The company and its affiliates allegedly use RealPage
recommendations to set prices on over 15,000 housing units in the district, according to
this complaint. Landlords like JBG associates, Avalon Bay, Mid-America
Apartment Communities and Equity Residential were also named in the complaint, which was filed in
November 2023. If you talk about the large apartment buildings in our
city, the market concentration is north of 5,060%. And then if you add in that type of market
with the total DMV, you have close to an 80 or 90%
concentration of units in these named defendants. They are not only providing housing in the District of
Columbia. These are national players. For example, Greystar managed over 700,000 units in
2023. Three of the 14 named defendant landlords filed
motions to dismiss the case in January 2024. According to D.C. Superior Court records, an initial
conference for the case is scheduled for May 2024. The defendant landlords declined to comment on pending
RealPage litigation. This lawsuit and others focus on the software that's
provided by Richardson, Texas based RealPage. Realpage products are used to set prices on
roughly 4.5 million housing units in the United States. That includes the units in this complex, some of which
had rents starting at just under $3,000 a month in January 2024. We've been told as tenants by employees of equity, that
the software takes empathy out of the equation so they can
charge whatever the software tells them to charge. Property managers started to price apartments with
RealPage products in the mid 2000. It's pretty much unequivocal. Just turning this system on and letting it perform
will outperform your your manual analysts. There's almost no way it can't. Geoffrey Roper is the inventor of Yieldstar. The product was acquired by RealPage in 2002. Its model was combined with another software lease
rent options and reintroduced in a new AI tool dubbed AI arm for short. So you're going to find large REITs and portfolios out
there? Absolutely. It's everywhere. You know, I can tell you from the design of Yieldstar,
it is not directly looking at what the guy across the street is doing in order to determine my
rents. He has pieces falling into vacancy points in time that
I do not have. The company says its software can increase a landlord's
revenues by 2 to 7%. Realpage told CNBC that it charges landlords a fixed
fee for each unit that it helps manage, regardless of its rent price. What happens with the proceeds is up to private equity
giant Thoma Bravo, which acquired RealPage for $10.2 billion in 2021. In court filings, Thoma Bravo claimed that it's not
liable for the acts of its subsidiary. The attorney general in D.C. says local landlords comply with Realpage's
recommended prices over 90% of the time. Our complaint alleges that the terms of agreement that
the landlords and property owners agree to compel those landlords to charge the rents that the
algorithm that RealPage creates spits out. So rather than making independent decisions
on what the market here in D.C. calls for in terms of filling vacant units, landlords
are compelled, under the terms of their agreement with RealPage, to charge what RealPage tells
them. Realpage told CNBC that its landlord customers are
under no obligation to take their price suggestions. It also says that the algorithm may
suggest downward price revisions depending on the context. That could depend on how much housing gets
built, according to expert testimony in Congress. The problem is that as prices have gone up since 2011,
we have not seen an entry of new developers that compete with those that
are incumbent. New construction in key housing markets like Orange
County, San Francisco and New York is low, according to forecasts shared by companies like Equity
Residential. Or 96% occupied. We raised the dividend 6% a few months ago. So the story is housing is expensive and
undersupplied. That could give landlords more power to increase rents. This dynamic of one tenant to a massive landlord, when
it's one on one, you really have almost no hope. They can basically crush you. Equities Investor Materials say the company started to
implement apartment pricing software between 2005 and 2008. They were using some kind of system that every day
would check and see what the rents were. The entire process had always been stressful, but over
the last couple of years, especially after Covid, it just got so much worse. Rita Botelho says she moved into Portside Towers
beginning in 2004. She moved out after a 2022 rent hike, which left her
living with relatives. Even in the area that we're in right now, my my
stepkids apartment. The rents here are also going up. They're also now fearful. It affects people whether they have rent control or
not. Right. It's manipulating what the market rate is. Tenants across the United States have launched numerous
lawsuits against their landlords for using RealPage. At least 34 landlords were involved in litigation in
2023. The Justice Department filed a statement of interest
in the class action, arguing that the complaints adequately alleged violations of the Sherman Antitrust
Act. The Honorable Judge Waverly Crenshaw in Tennessee will
preside over the case. He set a February deadline for a response from the
defendants. The lawsuits ask if the conduct of RealPage and the
defendant landlords violate antitrust laws or otherwise meet a legal definition of collusion. The lawsuit we brought is under our D.C. antitrust statute. Our lawsuit is aiming to do three things. First and foremost, it's to put an end to this
practice. We're also seeking a monitor to come in and put fresh
eyes on these landlords and the RealPage practices. And then finally we're seeking monetary
damages, penalties, but also restitution for tenants who have been unfairly and
illegally required to pay inflated rents higher than what a naturally
competitive market would have set for them. These systems are carefully designed to avoid
collusion, to avoid conflict with fair housing and any other regulatory
environment. As we analyze the markets, we find the opportunity for
pricing dominance to be, uh, really questionable. There's just not as much concentration as we like to
see in the markets. Roper, the inventor of Yieldstar, now develops revenue
management software for the e-commerce industry. Similar products are also used in hotels, grocery
stores, and to set prices on toll roads. Back in Jersey city, tenants at Portside Towers
believe their building is subject to rent control. The local housing authority agreed, ordering
restitution that's potentially worth millions of dollars. Equity residential told CNBC it's filed a
lawsuit in federal courts challenging that decision, which was separate from the
RealPage complaints. But for the city's non-enforcement, we wouldn't be
subject to RealPage software or even market rate. There is no market rate under rent control. We not only lost our home, but we lost our community. We lost everything. The attorney general in D.C. hopes his case will preserve housing affordability in
the district. It's not only illegal and unlawful in this day and age,
it's just immoral and wrong. And that's why we felt it necessary to bring this
antitrust lawsuit when we did.