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The rise of (and the backlash against) AI rental software
It’s no secret that California’s lack of affordable housing and the slow pace of solutions to the decades-long crisis continue to increase pressure on renters.
According to some critics, there is a more recent factor contributing to rising rents: algorithmic software that some landlords use to set prices.
Popular software from Texas-based company RealPage offers AI revenue management that gives property owners suggestions on how much to charge in rent “to maximize their income potential.”
The company also sells an AI tool to screen potential tenants and “more accurately select the most suitable residents for your property.”
ProPublica previously reported this that the company used private data to recommend rental prices and discourage landlords from negotiating prices individually with tenants.
Spectators hold up signs during an LA County Board of Supervisors meeting in April.
(Al Seib / Los Angeles Times)
Now the FBI is investigating RealPage’s practices.
The U.S. Department of Justice, along with California and seven other states, sued RealPage in August, alleging the company participated in a price-matching scheme “that increased their rental income across the board, made possible by illegally sharing confidential prices and supplies.” information.”
“RealPage replaces competition with coordination,” the lawsuit said. “It replaces unity with rivalry. It undermines competition and the competitive process. It does this openly and directly – and American renters are paying the price.”
The alleged price fixing impacted tenants in markets across California, according to State Atty. Gen. Rob Bonta, who noted multifamily housing in many Southern California counties.
“Anti-competitive agreements are illegal, whether done by a human or a software program,” Bonta said in a press release at the time. “Every day, millions of Californians worry about keeping a roof over their heads and RealPage has immediately made it harder to do that.”
Some tenant advocates in LA say the company is partly responsible for the region’s homelessness crisis.
“Large corporate landlords have used RealPage to collude and inflate rents, impacting not only their own tenants who pay sky-high rents, but also all tenants who have to look for a place to live in a rental market shaped by that conspiracy,” says Rose. Lenehan, an organizer with the Los Angeles Tenants Union, told me.
RealPage has argued that the country’s well-documented lack of affordable housing is the true source of high rents and accused the media of publishing “false and misleading claims” about the company.
“RealPage is proud of the role our customers play in providing safe and affordable housing to millions of people,” RealPage Chief Executive and President Dana Jones said in a statement. “Despite the noise, we will continue to innovate with confidence and ensure our solutions benefit both residents and housing providers.”
(Rich Pedroncelli / Associated Press)
Some Golden State cities aren’t waiting for the feds to push back.
The San Francisco Board of Supervisors has become the first in the nation to approve a ban on algorithm-based property management software, including RealPage.
Bans are also issued by leaders San Jose And San Diego.
In September, LA City Council Member Heather Hutt submitted a motion that would require the city’s housing department to report on how many individual landlords and property management groups use algorithm-based software to set rents, as well as the “feasibility of instituting a ban.” That motion was referred to the municipality’s housing committee, but was not yet on the agenda last week.
It remains to be seen whether the federal case will move forward under Trump’s presidency.
Under President Biden, antitrust actions intensified as the Justice Department and Federal Trade Commission took significant action against major industries, including Big Tech, the financial services industry, and pharmaceutical giants.
But the new Trump administration could have a chilling effect on lawsuits and prosecutions for antitrust violations, experts say, similar to what we saw during Trump’s first term.
In connection, RealPage said it received a notice from the Justice Department’s Antitrust Division earlier this month closed a criminal investigation into the companyalthough that was separate from the civil lawsuits that were filed and still active.
“We remain steadfast in our belief that RealPage’s revenue management software benefits both housing providers and residents and that the remaining lawsuits are based on misinformation and baseless allegations,” the company said. said in a statement.
Today’s top stories
(Kent Nishimura/Los Angeles Times)
Politics and power
Climate and environment
What else is going on
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This morning’s must-reads
(Robert Gauthier / Los Angeles Times)
More people dying in LA County go unclaimed. “While there are more resources than ever to identify the unknown dead and locate surviving relatives, the percentage of people whose relatives cannot claim their remains is increasing,” The Times’ Corinne Purtill wrote this week. , “a shift that sociologists attribute to changing family dynamics, growing mobility and an epidemic of loneliness.”
Other must-reads
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For your downtime
Somni’s patio in West Hollywood.
(Stephanie Breijo / Los Angeles Times)
Going out
Stay indoors
A question for you: What is your favorite holiday movie?
Do you enjoy classics like ‘It’s a Wonderful Life’? Or are you going straight to “National Lampoon’s Christmas Vacation”?
Email us at [email protected] and your response may be included in this week’s newsletter.
And finally… your photo of the day
Show us your favorite place in California! Send us photos you’ve taken of special places in California – natural or man-made – and tell us why they are important to you.
(Brian van der Brug/Los Angeles Times)
Today’s great photo is from the Times staff photographer Brian van der Brug. A crew of firefighters takes cover as an LA County helicopter drops water on Malibu’s Frankiln fire Tuesday. By Sunday evening, the fire had scorched just over 10,000 acres and was 49% contained.
Have a nice day from the Essential California team
Ryan Fonseca, reporter
Amy Hubbard, deputy editor, Fast Break
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