Have you heard? Landlords throughout the nation are increasingly relying on artificial intelligence to boost rental prices, and it’s raising some serious concerns. A recent study released by the White House Council of Economic Advisers has revealed that these landlords are collectively raising rents by an astonishing $3.8 billion each year, thanks to an AI tool known as “AI Revenue Management” from RealPage.
This AI solution is integrated into RealPage’s property management software and is intended to help landlords determine optimal rent prices. However, it’s being exploited to facilitate collusive behavior among landlords, enabling them to illegally hike rental costs. This tactic, referred to as “price coordination,” essentially constitutes price fixing, which is against the law under the Sherman Act.
The findings indicate that nearly 25% of multifamily rental properties are utilizing the RealPage pricing algorithm, with some areas experiencing even greater rates of adoption. In cities such as Atlanta and Denver, landlords employing this AI tool have managed to raise rents by as much as $181 per month.
RealPage maintains that its clients have the ultimate authority to either accept or reject the AI-generated price suggestions. However, there is mounting evidence that RealPage and its landlord partners have created a system that encourages adherence to these AI-driven pricing strategies.
Moreover, the report highlights that the $3.8 billion figure pertains solely to landlords who are directly using the AI tool. Other landlords might also increase their prices in reaction to competitors who are leveraging these AI recommendations, leading to even steeper costs for renters.
In summary, banning the use of AI for setting rental prices could lead to a significant reduction in rental price hikes across the country. This situation isn’t just a matter for tenants and landlords; it’s fundamentally about maintaining fair competition in the rental market.
