San Francisco is the first city in the nation to ban AI software used to set rent prices, as the Board of Supervisors unanimously approved banning algorithms used to maximize what landlords charge for rent.
Your landlord might be using AI to set your rent price — or rather, to jack up your rent price, or even keep units vacant because the algorithms say it’s more profitable for them in the long run. That’s what the New York Times found in a recent analysis of the AI software company called RealPage, which has drawn numerous lawsuits alleging that the software facilitates collusion and price-gouging.
According to SF Supervisor Aaron Peskin’s office, this software is being used by some of the city’s biggest residential landlords, including Brookfield Properties, Greystar, Equity Residential, and UDR, Inc.
But they won’t be using it much longer. Bay City News reports that the SF Board of Supervisors unanimously voted to ban the use of AI rental-price software on Tuesday, making San Francisco the first city in the nation to do so.
“Banning automated price-fixing will allow the market to work and bring down rents in San Francisco,” the measure’s author Peskin said in a statement after Tuesday’s vote. “We want to put more units on the market. Let’s be clear: RealPage has exacerbated our rent crisis and empowered corporate landlords to intentionally keep units vacant. So we’re taking action locally to ensure our working renters can afford to live here.”
RealPage has a product called YieldStar that uses data analytics to compare competitors’ rental prices to suggest the maximum prices for units. The company has claimed in marketing materials that its software helps landlords “outperform the market 3% to 7%.”
According to the Examiner, RealPage declined an invitation to speak at a Board of Supervisors committee meeting debating Peskin’s ban. But instead, the company sent a lengthy six-page data packet to refute the claims being made against it.
“RealPage revenue management software serves a much smaller portion of the rental market than has been falsely alleged,” the company said in that packet. “Contrary to the implausible allegations about RealPage’s purported market power, the actual data shows that RealPage revenue management software has low penetration rates that cannot possibly support a conspiracy to fix prices or collude through the software.”
The supervisors’ ban of the software is not yet in effect. The measure needs to be approved in a second reading and vote, and the supervisors are now on their summer recess for the entire month of August. So the earliest that second vote could happen is Tuesday, September 3.
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Image: Josh Hild via Unsplash
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