Legislators bring antitrust case against RealPage for helping landlords use AI to price rents

Algorithmic rental pricing tools have emerged as a contentious issue in the housing market, with RealPage’s AI-powered software drawing scrutiny from regulators and local governments over potential market manipulation.

Market dominance and technology: RealPage controls 80% of the commercial revenue management software market through its YieldStar and AI Revenue Management products, which use proprietary algorithms to set rental prices.

• The software aggregates private rental data from multiple landlords to generate pricing recommendations, creating a comprehensive database of rental market information
• Federal prosecutors have labeled this practice an “unlawful information-sharing scheme” and initiated antitrust litigation against RealPage
• Despite RealPage’s assertion that landlords can reject pricing recommendations, prosecutors argue there is significant pressure to follow the algorithm’s guidance

Local government response: Cities across the United States are taking legislative action to restrict algorithmic rental pricing amid concerns about artificial rent inflation.

• San Francisco and San Diego are among the municipalities considering or implementing bans on algorithmic pricing tools
• Average rent in San Diego increased by 21% between 2020 and 2024, highlighting the significant impact on local housing markets
• These regulatory efforts represent growing pushback against automated pricing systems in the rental sector

Economic impact and affordability: The widespread adoption of AI pricing tools has raised concerns about their effect on housing affordability and market dynamics.

• Even professionals with stable employment are struggling to cope with algorithm-driven rent increases
• RealPage maintains that housing supply constraints, not their technology, are responsible for rising rental costs
• California public pension funds have indirect investments in RealPage through private equity ownership, adding complexity to the regulatory landscape

Critical implications: The controversy surrounding RealPage’s pricing tools highlights broader questions about the role of AI in essential markets like housing, where automated decision-making can have significant social and economic consequences.

• The situation exemplifies the growing tension between technological innovation and market regulation in the housing sector
• The outcome of current legal challenges and local legislation could set important precedents for the future of AI-driven pricing in real estate
• The debate continues over whether such tools serve legitimate business purposes or facilitate anti-competitive behavior that harms consumers