Is One Company to Blame for Soaring Rental Prices in the U.S.? The FBI recently raided a major corporate landlord while investigating a rent price-fixing scheme. Here's what we know.

The Federal Bureau of Investigation (FBI) conducted an unannounced raid of national corporate landlord Cortland Management on May 22, ramping up an investigation into an alleged rental price-fixing conspiracy that may have already impacted millions of Americans.

The surprise search was reportedly part of a criminal antitrust investigation by the U.S. Department of Justice (DOJ) into RealPage, a $9 billion software company that recommends rent raises on millions of housing units across the U.S.

Per RealPage blog posts, Atlanta, Georgia-based Cortland, which owned nearly 85,000 apartment units as of June 2022, used RealPage's algorithm to "ensure consistent vendor pricing for their communities from Arizona to Georgia."

RealPage's effects can be seen most noticeably in Atlanta, where software-based pricing affects more than 80% of rentals. Since 2016, rents in the city have grown by 80% — and higher vacancy rates have not driven prices down.

^{Apartment buildings. Credit: Getty Images}

The problem with RealPage, according to multiple lawsuits filed in the past two years in California, Arizona, New York, and other states, is that its algorithm increases rental prices in response to data collected from landlords — not according to demand.

Landlords "were not competing at all," Arizona Attorney General Kris Mayes stated in a February lawsuit announcement against RealPage.

"They were colluding with one another," Mayes said.

According to the Arizona lawsuit, and others filed, landlords gave RealPage detailed information about rent prices, lease terms, amenities, move-out dates, and occupancy rates.

"Using this sensitive data RealPage directed the competitors on which units to rent, when to rent them, and at what price," Mayes stated. "This was not a fair market at work, this was a fixed market."

Related: State Attorney Generals Sue RealPage, Landlords Over 'Astronomical' Rent Hikes: 'This Was Not A Fair Market At Work'

RealPage's reach is undeniable. A D.C. lawsuit showed that 60% of apartment buildings in the area set prices using RealPage. In Phoenix, Arizona, 70% of apartment units were owned or managed by companies using its software.

Over 16 million rental units across the U.S. used RealPage's algorithm as of a 2020 blog post.

"That's a very large chunk of the total inventory in the country when you consider that there are about 22 million investment-grade apartments in the US today," Tracy Saffos, industry principal at RealPage, said in the same post.

Related: Where Are Rents Dropping the Most in the U.S.?

RealPage's impact on renters has been noticeable — even to executives at the company.

When asked about the role RealPage's technology played in rising apartment rents, company executive Andrew Bowen said that the software was "driving it."

"As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually," Bowen said.

Even though RealPage told CNBC that its landlord customers aren't required to use the rent increases its algorithm recommends, a 2022 investigation by ProPublica revealed that landlords accepted 80-90% of the algorithm's suggestions.

RealPage sent out "pricing advisors" to meet with landlords in person to follow up on their use of its recommended rates, according to the February Arizona lawsuit against the company.

In the past ten years, rent inflation has outpaced overall inflation numbers by 40.7%.