Key facts
- Compass faces a class action lawsuit alleging it artificially raised New York City rents by delisting properties from platforms like StreetEasy.
- Plaintiffs claim Compass's actions created a "supply shock" and exacerbated the city's housing affordability crisis.
- The suit alleges Compass controls over 80 percent of Manhattan rental listings and manipulates prices.
- Compass previously filed and voluntarily dismissed an antitrust suit against Zillow.
- Federal and local authorities are also investigating Compass for potential antitrust violations.
A class action lawsuit has been filed against Compass by two New York City renters, Peter Castaneda and Haley Gelfand, who allege the brokerage has engaged in anti-competitive practices that have driven up rental prices. The plaintiffs claim Compass has created a "supply shock" by delisting a significant number of rental units from free digital platforms like Zillow and its subsidiary StreetEasy, thereby artificially inflating rents.
According to the complaint, Compass has acquired numerous brokerage firms over the past decade, establishing a monopoly that controls "over 80 percent of the rental unit listings available for renters in Manhattan." This alleged control allows Compass to "literally dictate pricing for as much as 80 percent of Manhattan’s rental units." The lawsuit contends that Compass's strategy involves "hiding listings from the public" to enable its agents to "double-dip to increase revenue per transaction, boost its stock price, and effectively ignore the consumer."
In response to Compass's mass-delistings, Zillow implemented new standards to prevent such practices. This led Compass to file an antitrust suit against Zillow, which was later dismissed by a judge who found Compass unlikely to succeed on the merits. Local and federal authorities, including US Senator Elizabeth Warren, have also initiated antitrust probes into Compass's alleged market manipulation.
The renters argue that Compass's actions have directly contributed to rising rents in New York City. Castaneda cited his August lease for a one-bedroom in downtown Manhattan at $5,270 per month, significantly higher than the area's average/median asking rent of $4,390 a month prior. Gelfand reported a similar experience, witnessing prices increase on StreetEasy before signing a lease for the same price.
The complaint points to a 40 percent decrease in available rental units across New York City over the past year, coinciding with a 3 percent rise in rental prices in June, which doubled to 6 percent in July as inventory continued to shrink. The renters seek disgorgement of unjust enrichment, damages for artificially inflated rent prices, and an injunction to prevent Compass from hiding listings from public platforms.