A horrifying real estate practice is happening all over the country and some cities in California are trying to fight back — landlords are using AI pricing software to drive up rents.
As California Attorney General Rob Bonta said, “Every day, millions of Californians worry about keeping a roof over their head and RealPage has directly made it more difficult to do so.”
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Realpage is a Texas-based company that created software that allows landlords to collect and combine their collective information about rent prices, thus providing justification for landlords in one state to raise rents when a landlord in another state raises rents.
On the surface, it sounds like just another tool that helps business owners, but critics argue it’s a giant price-fixing scheme exclusive to landlords that reduces competition and drives up rent. The US Department of Justice has filed an antitrust lawsuit against RealPage accusing the company of manipulating rent prices in cities like San Diego, where rent has increased by almost 50 percent since 2017, CalMatters reported.
Earlier this year, San Francisco—currently in the midst of its own housing crisis—became the first city in the United States to ban the practice of algorithmic pricing. The city of San Jose is considering its own ban.
RealPage contends that its software isn’t what’s driving up rent prices but rather the lack of readily available housing for people to move into. When there is low supply and high demand, prices will rise. Simple supply and demand kind of stuff. And there is a lot of truth to that.
But while RealPage argues that its platform is just a way for landlords to share data relevant to their field, Attorney General Bonta likely speaks for many legislators across California when he said, “The technology is being used as a way of keeping an arm’s length from one big company to the other. But that’s an illusion,” implying that rather than being just a data collecting tool, landlords are using this data to decrease competition between landlords.
