Rent Too High? Blame AI, New Report Finds

Did you know that landlords across the country are using artificial intelligence to inflate rental prices? It’s true – a recent report by the White House Council of Economic Advisers revealed that landlords are collectively increasing rental prices by over $3.8 billion annually using an AI tool called “AI Revenue Management” from RealPage.

This AI tool, packaged as part of RealPage’s property management software, is designed to provide rent price recommendations to landlords. However, it is being used to facilitate collusion among landlords, allowing them to inflate rental prices illegally. This practice, known as “price coordination,” is a form of price fixing and is prohibited by the Sherman Act.

According to the report, nearly one in four multifamily rental properties use the RealPage pricing algorithm, with some municipalities seeing even higher adoption rates. In cities like Atlanta and Denver, landlords using the AI tool have been able to increase rental prices by as much as $181 per month.

RealPage argues that customers have the discretion to accept or reject the AI’s price recommendations. However, evidence suggests that RealPage and its landlord clients have established a system to ensure compliance with the AI-optimized pricing.

The report also points out that the $3.8 billion figure only accounts for landlords directly using the AI tool. Other landlords may raise their prices in response to competitors using the AI recommendations, leading to even higher costs for tenants.

Overall, eliminating the use of AI to set rent prices could significantly decrease price mark-ups for rental housing nationwide. It’s clear that this issue goes beyond just tenants and landlords – it’s about ensuring fair competition in the rental market.