Are AI Tools Driving Up Rent Prices?
Have you heard that landlords across the nation are leveraging artificial intelligence to boost rental prices? It’s a startling reality—recent findings from the White House Council of Economic Advisers indicate that landlords are raising rental costs by more than $3.8 billion each year by using an AI mechanism known as “AI Revenue Management” from RealPage.
This AI system, integrated into RealPage’s property management software, is intended to offer rent pricing suggestions to landlords. However, it’s being manipulated to enable collusion among landlords, which allows them to unlawfully hike rental prices. This tactic, referred to as “price coordination,” falls under the umbrella of price fixing, which is illegal under the Sherman Act.
The report highlights that almost 25% of multifamily rental properties rely on the RealPage pricing algorithm, with certain areas experiencing even greater usage. For instance, in cities like Atlanta and Denver, landlords utilizing this AI tool have managed to increase rents by as much as $181 per month.
While RealPage contends that their clients have the choice to accept or reject the AI’s pricing suggestions, evidence reveals that there is a framework in place between RealPage and its landlord clientele that promotes adherence to these AI-driven price adjustments.
Furthermore, the report notes that the $3.8 billion figure is just the tip of the iceberg, as other landlords may also elevate their prices in reaction to competitors employing AI recommendations, resulting in even steeper costs for renters.
In conclusion, curbing the use of AI in rent pricing could lead to a substantial reduction in rental price surges across the country. This concern transcends the relationship between tenants and landlords; it’s fundamentally about fostering fair competition in the rental market.
/https%3A%2F%2Ftf-cmsv2-smithsonianmag-media.s3.amazonaws.com%2Ffiler_public%2F09%2Fb6%2F09b60007-939d-45c0-85a2-c95dc6f9d447%2Foldestanimals_web.jpg "From Giant Tortoises to Immortal Jellyfish, These Impressive Animals Are Eight of the Longest-Living Species on Earth")
