AI Is Raising Rents—Cities Are Pushing Back
If you’ve recently searched for an apartment and noticed sky-high rent prices across the board, you’re not imagining things. RealPage, a leading software company, is at the center of an antitrust storm for allegedly driving up rental costs through its algorithm-driven pricing platform. Federal prosecutors and lawmakers argue that this practice amounts to price-fixing in disguise, exacerbating housing crises across the country.
How RealPage’s Algorithm Works
RealPage’s software—YieldStar and its successor AI Revenue Management—collects rental data, including rent prices, lease information, and occupancy forecasts, from landlords. The algorithm analyzes this information and provides rent price recommendations.
Critics argue that by pooling sensitive data and centralizing pricing, RealPage:
- Reduces competition between landlords.
- “Coaches” landlords to keep rents higher, even during economic downturns.
Landlords, while free to reject these recommendations, often face resistance from RealPage pricing advisers if they attempt to lower prices. Federal prosecutors say the system creates a digital version of landlords collaborating to fix prices—an illegal practice.
Legislative Action and Federal Lawsuits
Concerns over RealPage’s influence have prompted a wave of legal and legislative action:
- San Francisco became the first city to ban algorithmic rent-setting in July.
- San Diego is drafting a similar ordinance to prohibit the use of such platforms.
- Philadelphia passed its own ban in September.
- The Justice Department, joined by eight state attorneys general, filed a lawsuit against RealPage in August, accusing the company of reducing competition and inflating rents.
Sean Elo-Rivera, San Diego’s city council president, likened RealPage’s system to a “dark, smoky room” where landlords secretly collaborate to keep prices high.
The Impact on Renters
The effects are clear: rents are skyrocketing, particularly in markets where RealPage operates.
- In San Diego, average rents have jumped 21% since 2020, reaching $2,336 per month—50% higher than the national average.
- Low-income renters and those without a college degree are disproportionately impacted, often spending up to 42% of their income on rent.
San Diego resident and Navy veteran Alan Pickens shared his struggle to keep up. Despite having a stable income and a lawyer wife, his family sacrifices gym memberships and cars just to afford rent. “Why are we struggling?” he asks.
RealPage’s Defense
RealPage maintains its software is pro-competitive, arguing that the housing shortage—not its technology—is to blame for rising rents. A spokesperson called the lawsuits “devoid of merit,” insisting the technology benefits landlords, tenants, and the market as a whole.
A Larger Problem
California, where 44% of residents rent (compared to 35% nationwide), is ground zero for the fight against algorithmic rent-setting. Critics argue that these systems enrich landlords while pricing out renters and worsening the housing crisis. Even California’s public pension funds have invested in RealPage through private equity, inadvertently contributing to a system that hurts their pensioners.
Moving Forward
The RealPage controversy raises deeper questions about:
- Fair competition in the rental market.
- The ethical use of algorithms in housing.
- How technology impacts affordability in already strained markets.
For renters like the Pickens family, the outcome of these lawsuits and legislative efforts could mean the difference between staying in their beloved cities or being forced to leave.
As Elo-Rivera puts it, “There couldn’t be a more clear example of the rich getting richer while the rest of us are struggling to get by.”
