Rental Prices Skyrocket As Landlords Leverage Ai Power

The High Cost of Artificial Intelligence in Rental Housing

A new report by the White House Council of Economic Advisers (CEA) highlights a growing concern in the rental housing market: the role of artificial intelligence in driving up rent prices. The AI tool, known as “AI Revenue Management,” is being used by landlords to coordinate pricing strategies, resulting in inflated costs for tenants.

Nearly 1 in every 4 multifamily rental properties use a property management software that includes an AI-powered pricing algorithm, with prices increasing by as much as $181 per month in cities like Atlanta and Denver. This phenomenon has been likened to price fixing, which is federally outlawed under the Sherman Act. The RealPage AI works as a price fixer for landlords collectively, recommending prices that are higher than what each landlord would set independently.

The Department of Justice has taken action against RealPage, alleging that the company’s AI tool facilitates price coordination among landlords. However, RealPage argued that customers have 100% discretion to accept or reject software price recommendations. A separate class action suit presents evidence of a rigorous monitoring and compliance system used by RealPage and its landlord clients.

The true cost of AI-set rent prices is likely much higher than the estimated $3.8 billion figure, as other landlords not using the AI tool may raise their prices in response to their competitors. Eliminating this cost would meaningfully decrease price mark-ups for rental housing across the country.

As the use of AI in property management continues to grow, concerns about its impact on the rental market are growing. Landlords and policymakers must work together to ensure that consumers are protected from anti-competitive practices. The high cost of artificial intelligence in rental housing is a pressing issue that requires attention and action, particularly given the potential for AI-driven price coordination.