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The rise of (and backlash to) AI rental softwareIt’s no secret that California’s lack of affordable housing and the slow pace of solutions to the decades-in-the-making crisis continue to crank up the pressure on renters.
According to some critics, there’s a more recent contributor to rising rents: algorithmic software that some landlords utilize to set prices.
Popular software from Texas-based company RealPage offers AI revenue management that gives real estate owners suggestions on how much to charge for rent “to maximize their revenue potential.”
The company also sells an AI tool to screen would-be tenants and “more accurately [select] the most appropriate residents for your property.”
ProPublica previously reported that the company was using private data to recommend rents and discourage landlords from negotiating prices individually with renters.
Audience members hold up signs at an L.A. County Board of Supervisors meeting in April.
(Al Seib / Los Angeles Times)
Now the feds are looking into RealPage’s practices.
The U.S. Department of Justice, along with California and seven other states, sued RealPage in August, alleging that the company took part in a pricing alignment scheme “that increased their rent revenue across the board, enabled by the illegal sharing of confidential pricing and supply information.”
“RealPage replaces competition with coordination,” the lawsuit states. “It substitutes unity for rivalry. It subverts competition and the competitive process. It does so openly and directly — and American renters are left paying the price.”
The alleged price fixing affected renters in markets throughout California, according to state Atty. Gen. Rob Bonta, who singled out multifamily buildings in many Southern California counties.
“Anticompetitive agreements are illegal, whether done by a human or software program,” Bonta said in a news release at the time. “Every day, millions of Californians worry about keeping a roof over their head and RealPage has directly made it more difficult to do so.”
Some L.A. tenant advocates say the company is partially to blame for the region’s homelessness crisis.
“Large corporate landlords have used RealPage to collude and inflate rents, affecting 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 collusion,” Rose Lenehan, an organizer with the Los Angeles Tenants Union, told me.
RealPage has contended that the nation’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 make sure our solutions continue to benefit residents and housing providers, alike.”
(Rich Pedroncelli / Associated Press)
Some Golden State cities aren’t waiting on the feds to push back.
San Francisco’s Board of Supervisors approved a nation-first ban on algorithm-based property management software, including RealPage’s.
Bans are also being floated by leaders in San Jose and San Diego.
In September, L.A. City Councilmember Heather Hutt introduced a motion that would require the city’s housing department to report on how many individual landlords and property management groups are using algorithm-based software to set rents, as well as the “feasibility of instituting a ban.” That motion was referred to the council’s housing committee but had not been placed on the agenda as of last week.
It remains to be seen if federal case will proceed under a Trump presidency.
Under President Biden, antitrust actions ramped up 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 incoming Trump administration could have a cooling effect on litigation and prosecutions for antitrust law violations, experts say, similar to what we saw during Trump’s first term.
On a related note, RealPage said it received notice earlier this month that the Justice Department’s Antitrust Division had closed a criminal probe into the company, though that was separate from the civil lawsuits that were filed and still active.
“We remain unwavering 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 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 who die in L.A. County are going unclaimed. “Although there are more tools than ever to identify the unknown dead and track down surviving family members, the percentage of people whose next of kin cannot — or choose not — to claim their remains is increasing,” The Times’ Corinne Purtill wrote this week, “a shift sociologists attribute to changing family dynamics, growing mobility and an epidemic of loneliness.”
Other must reads
How can we make this newsletter more useful? Send comments to essentialcalifornia@latimes.com.
For your downtime (Stephanie Breijo / Los Angeles Times)
Going out
Staying in
A question for you: What is your favorite holiday movie?Enjoy the classics, like “It’s a Wonderful Life”? Or do you immediately go to “National Lampoon’s Christmas Vacation”?
Email us at essentialcalifornia@latimes.com, and your response might be included in the newsletter this week.
And finally … your photo of the dayShow us your favorite place in California! Send us photos you have taken of spots in California that are special — natural or human-made — and tell us why they’re important to you.
(Brian van der Brug/Los Angeles Times)
Today’s great photo is from Times staff photographer Brian van der Brug. A crew of firefighters duck for cover as an L.A. County helicopter drops water on the Frankiln fire on Tuesday in Malibu. As of Sunday evening, the fire had scorched a little over 4,000 acres and was 49% contained.
Have a great day, from the Essential California team
Ryan Fonseca, reporter
Amy Hubbard, deputy editor, Fast Break
Check our top stories, topics and the latest articles on latimes.com.
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