Why trust Greenbot
Artificial intelligence (AI)-powered rent-setting tools, like those from RealPage, are being criticized for pushing up rental costs. In August 2024, the U.S. Department of Justice (DOJ) and eight states filed a federal lawsuit against RealPage, accusing the company of price fixing and harming renters. Tenants and lawmakers argue these tools unfairly inflate prices, while cities across the U.S. are stepping in to ban their use.
Rising rents and pushback
RealPage’s software uses data from landlords, including rental applications, lease renewals, and occupancy rates, to recommend rent prices. Many landlords follow these recommendations without changes. Federal prosecutors claim this creates an “unlawful information-sharing scheme” that increases rents artificially.
According to the DOJ, the platform lets landlords “replace competition with coordination,” harming renters. RealPage’s software manages data for over 16 million rental units and dominates 80% of the rental pricing software market.
Nationally, housing costs have risen nearly 20% in four years. California, where 44% of households rent, has seen cities like San Francisco and San Diego act against rent-setting software. San Francisco banned these tools last October, and San Diego is preparing similar measures.
“Every day, millions of Californians worry about keeping a roof over their head, and RealPage has directly made it more difficult to do so,” said California Attorney General Rob Bonta. Lawsuits claim the algorithms keep rents high even in declining markets.
RealPage defends its technology, saying it reflects market trends. Spokesperson Jennifer Bowcock said, “A misplaced focus on nonpublic information is a distraction… that will only make San Francisco and San Diego’s historical problems worse.”
Impact on renters
Renters are feeling the squeeze. In San Diego, where rents have risen 21% since 2020, families are cutting expenses to make ends meet. Alan Pickens, a Navy veteran and renter, told The Markup, “My wife is an attorney, and I served in the Navy for 10 years and now work at Qualcomm. Why are we struggling?”
Critics say these algorithms prioritize profits over affordability. Sean Elo-Rivera, San Diego’s city council president, described the software as creating a “dark, smoky room” where landlords collaborate to raise rents predatorily. “In my estimation, the only winners in this situation are the richest companies who are either using this technology or creating this technology,” he said. “There couldn’t be a more clear example of the rich getting richer while the rest of us are struggling to get by.”
The DOJ’s lawsuit against RealPage could reshape the use of AI in housing. As more cities consider bans and legal challenges, the debate over ethical algorithm use is gaining momentum. With renters making up a large share of households, how these tools are regulated will play a major role in future housing affordability.
