AI-Driven Rent Hikes: White House Report Raises Concerns Over Landlord Practices
A recent White House report has shed light on a growing trend in the rental market: landlords using artificial intelligence (AI) tools to increase rent prices. The report, issued by the White House Council of Economic Advisers (CEA), focuses on a particular AI tool called “AI Revenue Management” and its impact on rental pricing strategies.
The AI tool, developed by RealPage, provides landlords with rent price recommendations based on complex algorithms. According to the CEA report, this technology has raised concerns about potential illegal price coordination among property owners.
RealPage’s AI Revenue Management system is reportedly used in a significant portion of multifamily rental properties across the United States. In some municipalities, such as Atlanta and Denver, usage rates are particularly high, raising questions about market competition and fair pricing practices.
The report highlights allegations that the AI tool may be facilitating price fixing, a practice illegal under the Sherman Act. Unlike traditional price fixing, which involves direct communication between competitors, the AI system potentially allows landlords to coordinate pricing indirectly through the shared use of the technology.
In response to these concerns, the Department of Justice has filed a lawsuit against RealPage. The company has defended its practices, asserting that its AI tool complies with legal standards. However, a separate class action suit has emerged, focusing on the compliance systems for AI pricing in the rental market.
The CEA report concludes that AI-set rent prices may have broader implications for the rental housing market. It suggests that as some landlords use AI to increase prices, others may follow suit, potentially leading to widespread rent hikes. The report estimates that eliminating AI-driven price mark-ups could significantly reduce rental housing costs for many Americans.
As this issue continues to develop, it raises important questions about the role of AI in pricing strategies and its impact on housing affordability. Regulators and policymakers are likely to scrutinize these practices more closely in the coming months.
