AI is costing American renters over $3.6 billion annually, according to new report
The property management software used by many corporate landlords, RealPage, is deploying AI to artificially inflate rental prices in the United States by more than $3.6 billion annually, according to a new report by the White House Council of Economic Advisers (CEA).
RealPage, owned by the private equity firm Thoma Bravo, includes a tool called “AI Revenue Management” that provides recommendations for rental prices based on data from competitors. The feature, according to the CEA, the Department of Justice (DOJ), and class action lawsuits, facilitates “price coordination.” It allows individual landlords to “act as if they are a single dominant landlord, and use their collective market power to increase profits by setting higher prices.”
According to the CEA, “nearly 1 in every 4 rental” in the multi-family housing sector “uses a RealPage pricing algorithm.” In some metropolitan areas, including Atlanta and Dallas, more than 50% of multi-family units use RealPage to set prices.
The CEA report is the first effort to quantify the difference between prices set by landlords using RealPage and prices in a truly competitive market. Looking at data from 2023, the CEA found that “algorithmic pricing cost renters in algorithm-utilizing units $70 a month, or 4% of rent, on average nationally.” In six metro areas — Atlanta, Denver, Dallas, DC, Riverside, and Tampa — the price increase attributable to RealPage exceeds $100 a month. [Continue reading…]