AI drives rent prices higher, new study reveals

Artificial intelligence software RealPage is being used by landlords nationwide to artificially inflate rental prices, resulting in an estimated $3.8 billion in additional costs for tenants annually.

The core issue: RealPage’s “AI Revenue Management” tool, used by approximately 25% of multifamily rental properties across the United States, is enabling landlords to coordinate pricing without direct communication.

• The White House Council of Economic Advisers (CEA) has identified this practice as a form of price coordination, which violates federal antitrust laws
• In cities like Atlanta and Denver, where more than 50% of properties use the software, tenants are paying up to $181 more per month
• The Department of Justice has filed a lawsuit against RealPage over these practices

Legal implications: The use of AI for rental price setting appears to violate the Sherman Act, which prohibits anti-competitive practices and price fixing among market competitors.

• RealPage’s algorithm recommends prices higher than what individual landlords would set independently
• The software effectively enables landlords to operate as a cartel without direct communication
• Traditional price-fixing requires explicit agreements between competitors, making this AI-enabled version particularly difficult to prove

Industry defense and countersuit: RealPage maintains its innocence while facing multiple legal challenges.

• The company claims customers have complete discretion to accept or reject pricing recommendations
• A class action lawsuit, however, alleges RealPage and landlords have implemented strict monitoring systems to ensure compliance with AI-optimized pricing
• Evidence suggests participation in the program involves significant pressure to follow the AI’s recommendations

Broader economic impact: The true cost to renters likely exceeds the $3.8 billion estimate.

• The CEA’s calculation only includes direct price increases from properties using RealPage
• Non-participating landlords often raise their prices in response to competitors using the AI tool
• The ripple effect throughout rental markets suggests a more extensive impact on overall housing affordability

Technology’s role in market manipulation: This case demonstrates how AI can be used to circumvent traditional antitrust regulations while achieving similar anti-competitive outcomes.

• The use of AI as an intermediary creates a legal gray area in antitrust enforcement
• The technology enables coordinated pricing behavior without traditional evidence of collusion
• This practice could set a concerning precedent for other industries looking to coordinate pricing through algorithmic means